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City of Santa Rosa et al v. Raman D. Patel et al

December 21, 2010

CITY OF SANTA ROSA ET AL., PLAINTIFFS AND APPELLANTS,
v.
RAMAN D. PATEL ET AL., DEFENDANTS AND APPELLANTS.



Trial Court: Superior Court of Sonoma County Trial Judge: Honorable Mark Tansil

The opinion of the court was delivered by: Rivera, J.

CERTIFIED FOR PUBLICATION

(Sonoma County Super. Ct. No. SCV-237667)

These appeals, consolidated on this court's motion, follow the trial court's entry of an order awarding the City of Santa Rosa and the People of the State of California (collectively, the City) attorney fees in this red light abatement action. In appeal No. A124199, the City contends that the court erred in using a cost-plus approach rather than the lodestar method in calculating the amount of the attorney fees award. In appeal No. A124452, the Patels*fn1 argue that the court erred in awarding fees because the City lacked standing to pursue the underlying action and that, in any event, the fee award should be modified as the City's judgment in the underlying case was modified on appeal. We conclude that the trial court erred in not using the lodestar method to calculate the fee award and, therefore, remand the matter to the trial court for a recalculation of the fee award. We will dismiss appeal No. A124452 as moot.

I. FACTUAL BACKGROUND

On June 25, 2008, the court entered judgment in favor of the City under the red light abatement law (Pen. Code, § 11225 et seq.) and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.).*fn2 On July 30, 2008, the City filed a motion seeking attorney fees under Civil Code*fn3 section 3496, subdivision (b). It sought fees totaling $274,857.25 under the lodestar method claiming an attorney hourly rate of $325. The Patels opposed the motion, contending that the fees requested by the City were unreasonable and that only the actual fees incurred should be awarded.

Following a hearing on the motion, the court ruled that the City was entitled to attorney fees under section 3496 as the prevailing party in an abatement action. The court, however, determined that the City was not entitled to the prevailing market rate, but that fees would be limited to the actual cost of the services rendered. The court, therefore, asked the City to document the actual government cost for the hours worked. The court further found that the Patels had not successfully contested the amount of hours worked by the City and, thus, set a hearing to address only the costs of the services rendered.

After another hearing on the fee issue, the court, using a cost-plus method to calculate fees, ordered that the City was entitled to fees of $152,506.17 based on an hourly rate of $177.34. The court noted, however, that if a market approach was ultimately found to be appropriate, the lodestar rate of $325 per hour requested by the City was reasonable. These appeals followed.

II. DISCUSSION

We review the trial court's order awarding fees for abuse of discretion. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095 (PLCM Group).)

The City contends that the court abused its discretion in using a cost-plus approach in calculating the fee award under section 3496, subdivision (b) rather than the lodestar prevailing market rate method.

Section 3496 provides for the recovery of attorney fees in certain actions, including a nuisance abatement action in which a governmental agency seeks to enjoin the use of a building or place being used for prostitution. (§ 3496, subd. (b); People ex rel. Cooper v. Mitchell Brothers' Santa Ana Theater (1985) 165 Cal.App.3d 378, 387.) Section 3496 does not provide for the method to be utilized in calculating a fee award, but the Legislature has endorsed the use of the lodestar method of calculating fees except in circumstances where it expressly provided otherwise. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1135 (Ketchum); see also Meister v. Regents of University of California (1998) 67 Cal.App.4th 437, 448-449 (Meister) [lodestar method applies to a statutory fee award unless the statutory authorization for the award sets forth another method of calculation].)

"[T]he fee setting inquiry in California ordinarily begins with the 'lodestar,' i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. . . . The reasonable hourly rate is that prevailing in the community for similar work. [Citations.] The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. [Citation.] Such an approach anchors the trial court's analysis to an objective determination of the value of the attorney's services, ensuring that the amount awarded is not arbitrary." (PLCM Group, supra, 22 Cal.4th at p. 1095.)

Here, however, the court chose not to use the lodestar method, relying on language in City of Oakland v. McCullough (1996) 46 Cal.App.4th 1, 6 (McCullough). In McCullough, the court addressed the question of whether overhead expenses were included within the recoverable attorney fees of government attorneys who prosecuted a drug house abatement action. There, the City of Oakland sought attorney fees based on the attorneys' actual hourly salaries plus an hourly overhead component consisting of employee fringe benefits and office operation expenses. (Id. at p. 4.) The court, in distinguishing federal civil rights and California private attorney general cases generally prosecuted by private counsel or public interest law firms, stated that "[t]here is no 'prevailing market rate' or 'reasonable market value' for prosecutions [by government counsel], for they are not provided in a free market. The cost of such services is the only sensible basis for calculation of a fee recovery." (Id. at p. 6.) The court concluded that "because the Legislature intended section 3496 to offset the ...


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