United States District Court, N.D. California, San Jose Division
PRESS RENTALS, INC. f/k/a EAGLE NORTH AMERICA, INC., Plaintiff,
GENESIS FLUID SOLUTIONS, LTD. and MICHAEL K. HODGES, Defendants.
ORDER GRANTING PLAINTIFF'S ATTORNEY'S FEES
[Re: Docket No. 133]
EDWARD J. DAVILA, District Judge.
Presently before the court is Plaintiff Press Rentals, Inc.'s ("Plaintiff") Motion for Attorney's Fees. Dkt. No. 133. Plaintiff seeks $109, 929 in fees from Defendants Genesis Fluid Solutions, LTD and Michael K. Hodges (collectively, "Defendants") based on the attorney's fees provision contained in a settlement agreement between them. Having carefully considered the relevant documents, the court finds this matter suitable for disposition without oral argument pursuant to Civil Local Rule 7-1(b). The hearing scheduled for September 12, 2014 will, therefore, be VACATED. For the reasons stated below, Plaintiff's motion will be GRANTED after a reduction in the amount requested.
The extensive factual and procedural background of this case can be found in this court's January 3, 2014 order granting in part and denying in part Plaintiff's motion for judgment on the pleadings. See Dkt. No. 127. Briefly, the facts pertaining to the instant matter are as follows:
This case is the offspring of litigation that occurred in 2008 between Press Rentals, Inc. (formerly known as Eagle North America, Inc.) and Genesis Fluid Solutions. No. 08-CV-02060-RMW (N.D. Cal.). That case resulted in a settlement agreement reached by the parties on June 26, 2009. No. 11-CV-02579-EJD, Dkt. No. 1, Compl., Ex. A, Settlement Agreement. The settlement agreement provided that Genesis Fluid would make monthly payments to Press Rentals (then-Eagle North America) until November 2010. Id . at § 1. The agreement included a cognovit clause stating that if Genesis Fluid does not comply with the payment schedule, then Press Rentals would be permitted to file with the court the judgment by confession documents attached to the settlement agreement, which would include the principal sum of $152, 000, less any payments made by Genesis, plus interest and "plus any all attorney's fees and costs incurred by [Press Rentals] in connection herewith after June 26, 2009." Id . at § 4. The settlement agreement was signed by both parties in July 2009. Id . at § 22.
Monthly payments were made to Press Rentals until May 2010, when Genesis Fluid failed to make a payment. Dkt. No. 133 at 3. In July 2010, Press Rentals told Genesis about this breach of the settlement agreement and demanded payment in accordance with the cognovit clause. Id . Genesis did not acknowledge this demand, but instead sent Press Rentals several checks in July, August, and September 2010, none of which Press Rentals cashed. Id.
In May 2011, Press Rentals commenced the instant action alleging breach of the settlement agreement. Dkt. No. 1. In January 2014, this court issued an order granting in part and denying in part Plaintiff's motion for judgment on the pleadings, and in April 2014, final judgment in favor of the Plaintiff was entered. Dkt Nos. 127, 132. On April 30, 2014, Plaintiff filed the instant Motion for Attorney's Fees. Dkt. No. 133. Defendants filed an opposition brief, and Plaintiff filed a reply brief. Dkt. Nos. 136, 137.
A. Entitlement to Attorney's Fees
"Under the American Rule, the prevailing litigant is ordinarily not entitled to collect reasonable attorney's fees from the losing party;" however, a statute or enforceable contract can overcome this default. Travelers Cas. & Sur. Co. of Am. v. P. Gas and Elec. Co. , 549 U.S. 443, 448 (2007) (internal citations and quotations omitted). "In a diversity case, the law of the state in which the district court sits determines whether a party is entitled to attorney fees, and the procedure for requesting an award of attorney fees is governed by federal law." Carnes v. Zamani , 488 F.3d 1057, 1059 (9th Cir. 2007). Thus, state law governs the enforceability of a contract provision providing for attorney's fees. In California, Civil Code section 1717(a) governs fee applications stemming from contract actions, providing:
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.
The court determines which party, if any, has prevailed on the contract for the purposes of awarding fees. Cal. Civ. Code § 1717(b)(1). Under this section, the prevailing party on a contract is the party that recovered a greater relief in the action on the contract. Id . § 1717(b)(2).
Here, the settlement agreement entered into by both parties contains an attorney's fees provision in its cognovit clause:
Cognovit Clause. In the event Genesis does not fully comply with the payment provisions of this Agreement within the time periods stated herein, Eagle is permitted to file the attached Judgment by Confession documents with the Court. (Exhibits A, B, and C hereto) The Judgment by Confession will expressly include the principal sum of One Hundred Fifty Two Thousand Dollars ($152, 000.00), less any payments made by Genesis, plus interest thereon accrued at the legal rate of ten percent (10%) per annum from June 26, 2009, plus attorney's fees and costs - in an amount according to proof - incurred by [Press Rentals] prior to June 26, 2009 in United States District Court, Northern ...