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Lansmont Corp. v. SPX Corporation

United States District Court, N.D. California, San Jose Division

March 27, 2014

SPX CORPORATION, Defendant(s).


EDWARD J. DAVILA, District Judge.


Plaintiff Lansmont Corporation ("Lansmont") brought the instant action to enforce a contract concerning vibration controller technology and related software. That contract, known between the parties as the Assignment and Grant-Back License Agreement or "AGBLA" for short, provided Lansmont the ability to inspect Defendant SPX Corporation's ("SPX") records upon 48 hours notice in order to ensure compliance with the AGBLA's terms. Beginning in 2009 and continuing through resolution of this action, the parties disagreed whether or not this inspection should occur. When all was said and done, the court found on summary judgment that SPX had breached the AGBLA and that Lansmont was entitled to an order requiring SPX's specific performance in the form of an inspection.

Presently before the court is Lansmont's Motion for Attorney's Fees and Costs as the prevailing party in this action. See Docket Item No. 111. SPX has filed written opposition to the motion. See Docket Item No. 112. Having carefully considered the relevant documents including time records lodged by Lansmont's counsel, the court has determined the motion should be granted to the extent it seeks an award of attorney's fees, but that the amount requested must be reduced to account for this action's limited scope.[1]


"State law governs whether there should be an award of attorney's fees in diversity actions." Hancock Lab., Inc. v. Admiral Ins. Co. , 777 F.2d 520, 525 (9th Cir. 1985). In California, awards of attorney's fees pursuant to a contract are governed by Civil Code § 1717, which provides:

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 determination of what amounts to "reasonable attorney's fees" is left to the court's discretion. Hancock Lab., Inc. , 777 F.2d at 526. Generally, the court begins by calculating the "lodestar, " or the number of hours reasonably expended multiplied by the reasonable hourly rate. McCown v. City of Fontana , 565 F.3d 1097, 1102 (9th Cir. 2009). "California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys' fee award." Margolin v. Reg'l Planning Com. , 134 Cal.App.3d 999, 1004-1005 (1982).

The court also considers certain factors to the extent they are relevant to the case, including (1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill necessary to perform the legal services properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation and ability of the attorneys, (10) the "undesirability" of the case, (11) the nature and length of the professional relations with the client, and (12) awards in similar cases. See LaFarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Corp. , 791 F.2d 1334, 1341-42 (9th Cir. 1986); see also Melnyk v. Robledo , 64 Cal.App.3d 618, 623-24 (1976) ("The trial court makes its determination after consideration of a number of factors, including 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."). Ultimately, California law allows a judge, having been informed of the relevant circumstances, to determine a reasonable fee from his or her own knowledge and experience. See Scott, Blake & Wynne v. Summit Ridge Estates, Inc. , 251 Cal.App. 2d 347, 358 (1967).


Before addressing the disputed topics, the court begins with what is not at issue. It is undisputed that the AGBLA provides for attorney's fees to the prevailing party in an action to enforce the contract.[2] It is also undisputed that Lansmont is the "prevailing party" for the purposes of a fee award under Civil Code § 1717, considering it successfully obtained summary judgment in its favor while SPX's motion was denied. See Cal. Civ. Code 1717(b)(1) ("[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.").

What is in dispute is whether the total amount of attorney's fees requested by Lansmont - $359, 036.00 - is reasonable considering the limited nature of this action. On that issue, the court has made certain observations based on its experience with this case. To begin, much of the litigation that occurred prior to summary judgment was due to Lansmont's apparent attempt to expand the scope of the case beyond what is permitted by the AGBLA. Indeed, despite the fact that AGBLA contains an explicit arbitration clause limiting court actions to those requesting specific performance, [3] Lansmont's Complaint made several allusions to monetary damages.[4] This may have been due to inartful or careless pleading, but it nonetheless required SPX to file a motion to dismiss and a motion to compel arbitration, both of which Lansmont opposed. In the end, the court dismissed two of Lansmont's causes of action with prejudice. These motions would not have been necessary but for Lansmont's conduct in contravention of the AGBLA, and Lansmont should not be compensated for fees it incurred in relation to these motions. See Beaty v. BET Holdings, Inc. , 222 F.3d 607, 610 (9th Cir. 2000) ("California law allows the trial court to reduce Beaty's attorneys' fees award based on the results she obtained, or not to reduce the fee award, as the trial judge finds is appropriate in the exercise of her discretion.").

Moreover, Lansmont's attempt to expand the case resulted in needless discovery disputes. The parties litigated two matters related to discovery before the magistrate judge. The first was a dispute over the scope of depositions, since Lansmont intended to ask SPX witnesses about topics at issue in a related arbitration between these same parties. See Docket Item No. 79. Lansmont justified its deposition topics by citing the broad nature of civil discovery. The magistrate judge largely disagreed with Lansmont, however, finding the proposed topics "overbroad" even as voluntarily narrowed. See Docket Item No. 83. In the second dispute, Lansmont sought an order compelling SPX to produce documents in response to a discovery request. See Docket Item No. 89. SPX argued the ...

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