California Court of Appeals, Fourth District, First Division
APPEALS from a judgment and orders of the Superior Court of San Diego County, No. 37-2008-00060705- CU-BC-NC William S. Dato, Judge.
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Miller & Steele and Robert M. Steele for Plaintiffs and Appellants.
Selman Breitman, Jennifer Friend and William J. Mall for Defendants and Appellants.
Defendants DISH Network LLC (DISH), AT&T Corporation (AT&T), and EchoStar Satellite LLC (EchoStar) appeal the judgment and two postjudgment orders in favor of plaintiffs Manuel and Deborah Holguin (the Holguins) following a jury trial on the Holguins' complaint for breach of contract, negligence, and other torts. DISH, AT&T, and EchoStar contend that the trial court erred by denying their motion for judgment notwithstanding the verdict and for a new trial and by granting contractual attorney fees to the Holguins. The Holguins cross-appeal, contending that the court abused its discretion in making an award of attorney fees that allegedly does not fully compensate the Holguins' attorneys. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Two AT&T sales agents visited the Holguins' home in November 2006. The sales agents offered the Holguins telecommunications services from AT&T and certain affiliates. The Holguins ordered a bundle consisting of telephone, Internet, and satellite television services. Deborah Holguin signed a "California Order Form Worksheet" (Order Form), which specified the types of telephone, Internet, and satellite television services that the Holguins had ordered. The Order Form identified the name of the "Authorized AT&T Sales Agent" who took the Holguins' order and further identified "AT&T California, " at an address in San Diego, as the entity to which the Holguins would need to give notice should they decide to cancel their order. The AT&T sales agents scheduled a date and time for installation of the equipment necessary for the Holguins' satellite television service. The Order Form identified the provider of the satellite television service as "AT&T | DISH Network."
Several weeks later, a DISH technician arrived at the Holguins' home to install the satellite dish and related equipment. The technician provided the Holguins with a document entitled "DISH Network Service L.L.C. Service Agreement" (Service Agreement) that memorialized the installation. The Service Agreement identified the work that the technician performed, the specific equipment installed, and the date and time of the installation.
Deborah also signed a "Digital Home Advantage Promotion Agreement" (Promotion Agreement) that recited the terms and conditions of a sales promotion governing the Holguins' satellite television order. At the time of installation, the technician also provided Deborah Holguin with a copy of another document, the Residential Customer Agreement, which was identified in the Service Agreement and incorporated by reference into the Promotion Agreement. The Residential Customer Agreement describes the terms and conditions of the Holguins' satellite television service.
The Promotion Agreement and the Residential Customer Agreement identify EchoStar as the party contracting with the Holguins. DISH is the successor entity to EchoStar. DISH has a subsidiary, DISH Network California Service Corporation (DISH California), which employs DISH's field technicians in San Diego. At the time of the Holguins' installation, those field technicians had business cards which identified DISH Network Service, LLC (DISH Network Service) as their employer and EchoStar as their e-mail provider. The Holguins' technician was working on behalf of DISH when he installed their satellite television equipment.
The Holguins' installation did not go as planned. The DISH technician drilled through a sewer pipe in the Holguins' wall, fed a satellite television cable through it, and patched the wall without repairing the pipe. The Holguins did not discover the improper installation until 14 months later. In the intervening time, the damaged pipe leaked sewer water into the surrounding wall cavity and caused mold buildup in the Holguins' home. As a result, the Holguins suffered respiratory problems and other health issues.
After they discovered the improper installation, the Holguins contacted either AT&T or DISH using the telephone number on their telecommunications bill. DISH sent a representative, who inspected the flawed installation and said that his company would take care of the damage. Concerned for their health, the Holguins moved out of their house, first to Manuel Holguin's parents and then to a series of hotels and other living arrangements. A DISH representative told the Holguins that DISH would reimburse them if they did not want to live in their house pending repair work, but the Holguins never received reimbursement.
DISH hired a general contractor, San Diego Painting, to repair the damage. San Diego Painting, in turn, engaged a mold remediator to clean the area around the damaged pipe. The mold remediator set up a containment area,
removed the affected drywall surrounding the pipe, and cleaned the residue from the sewer water leak. After the remediator's work was complete, a testing firm reported that mold levels were acceptable in the affected area. However, following that report, San Diego Painting attempted to patch up the Holguins' wall without removing the satellite television line or repairing the pipe itself. For this and other reasons, the Holguins became concerned that San Diego Painting was not handling the repair correctly. The Holguins contacted DISH about changing contractors, but no help was forthcoming.
The Holguins retained an attorney and an industrial hygienist, who told the Holguins that there was still extensive mold growth even after the remediator's work. In particular, there was evidence of mold growth in other areas of the Holguins' home, in addition to the area immediately surrounding the damaged pipe. The Holguins asked DISH to complete the remediation and repair, but DISH did not do any additional work. The Holguins eventually hired their own contractor, who performed the remediation and repair at the Holguins' expense.
The Holguins filed suit against DISH, DISH California, EchoStar, AT&T, San Diego Painting, and the two subcontractors engaged by San Diego Painting: mold remediator Michael & Lu Corporation (ServPro) and testing firm H.M. Pitt Labs, Inc. The Holguins alleged causes of action for breach of contract, negligence, trespass, concealment, private nuisance, intentional misrepresentation, and intentional infliction of emotional distress arising from the faulty installation and repair efforts. The Holguins demanded compensatory and punitive damages, as well as attorney fees, costs, and other relief.
The court held a three-week jury trial in December 2010. DISH California admitted that the Holguins' satellite television equipment was negligently installed, but it denied that it was responsible for damages beyond the cost of repairing the pipe and certain incidentals. Aside from DISH California's admission of negligence, defendants denied all of the Holguins' claims.
At trial, the court considered and granted a number of motions for nonsuit, including DISH California's motion on the Holguins' breach of contract cause of action. DISH California argued that it could not be held liable for breach of contract because it was not named in any of the agreements at issue. The court agreed and allowed the Holguins to proceed with their breach of contract claims against AT&T, DISH, and EchoStar only.
The Holguins' breach of contract claims were the subject of particular attention at trial, in part because of an attorney fees provision in the Residential Customer Agreement. During the preparation of jury instructions, the Holguins argued that the Residential Customer Agreement, along with the
Order Form, Service Agreements, and Promotion Agreement, comprised a single contract between the Holguins and AT&T, DISH, and EchoStar. The Holguins further argued that the contract contained an implied term requiring proper installation of the Holguins' satellite dish and related equipment. AT&T, DISH, and EchoStar disagreed with the latter argument, contending that the Residential Customer Agreement did not deal with installation and instruction on an implied term was improper. The court agreed with the Holguins. Therefore, in addition to instructions on the elements of the Holguins' breach of contract cause of action, which was submitted to the jury, the court gave the following instruction: "The court has determined that the contract entered into by plaintiffs included an implied term that the satellite dish and related equipment would be properly installed in their residence."
The jury found AT&T, DISH, and EchoStar liable for breach of contract and private nuisance. The jury also found DISH California liable for private nuisance. The jury determined that AT&T, DISH, DISH California, EchoStar, San Diego Painting, and mold remediator ServPro were negligent, though it decided that ServPro's negligence was not a substantial factor in causing harm to the Holguins. The jury also determined that the Holguins were negligent, but their own negligence was also not a substantial factor in causing their harm. The jury awarded a total of $109,000 in compensatory damages, which it apportioned among AT&T, DISH, DISH California, EchoStar, and San Diego Painting according to their relative faults. The award consisted of $54,000 in economic damages and $55,000 in noneconomic damages. The court entered judgment accordingly.
Following entry of judgment, AT&T, DISH, and EchoStar moved for a new trial on the Holguins' breach of contract cause of action or, in the alternative, for an order partially vacating the verdict and partial judgment notwithstanding the verdict. They argued that the court erred in instructing the jury that proper installation of the Holguins' satellite television equipment was an implied contractual term, that the court erred in referring to a singular "contract" in other jury instructions, and that no evidence was presented to support a breach of contract verdict against AT&T, DISH, and EchoStar. They contended that the only contracts in evidence that dealt with installation were the Service Agreements, which they argued only DISH Network Service was party to. The Holguins opposed, arguing that defendants had improperly
concealed the alleged separate existence of DISH Network Service and that, in any event, its separate existence was contradicted by the evidence at trial. The Holguins argued that they had a single contract with AT&T, DISH, and EchoStar, which was evidenced by separate written instruments: the Order Form, the Service Agreements, and the Residential Customer Agreement. On this basis, the Holguins argued that the court's jury instructions were proper and the jury's verdict was supported by the evidence. The court denied AT&T, DISH, and EchoStar's motion.
The Holguins then moved for recovery of their attorney fees on the grounds that a unilateral attorney fees clause in the Residential Customer Agreement entitled them to attorney fees pursuant to Civil Code section 1717. The Holguins' attorneys claimed that they incurred approximately $425,000 in fees in connection with the matter and that they were entitled to an enhancement of 1.5 times this amount. The grounds for their claimed enhancement included the contingent nature of their fee arrangement with the Holguins, the complexity of the matter, and the excellent results obtained. AT&T, DISH, and EchoStar opposed, arguing that the Residential Customer Agreement was governed by Colorado law and thus Civil Code section 1717 did not apply. They further argued that the jury's verdict did not establish that the Holguins were awarded any damages for their breach of contract cause of action, even if attorney fees were possible under the Residential Customer Agreement. As to the amount of attorney fees, AT&T, DISH, and EchoStar argued that it should be substantially reduced for various reasons and that no enhancement was justified.
After ordering further briefing on the details of the Holguins' fee arrangement with their attorneys, the court granted the Holguins' motion for fees in the amount of $180,648. The court found that the Holguins were entitled to a fee award, but that the claimed fees should be reduced. The two major grounds for such reduction were (1) excessive fees incurred as a result of a medical issue suffered by the Holguins' initial attorney, which caused a trial continuance, association of new lead counsel, and substantial duplicative work; and (2) apportionment of fees between the Holguins' breach of contract and tort causes of action. The court further found that no enhancement was warranted. The court noted that their contingent fee arrangement with the Holguins would have entitled their attorneys to only $16,200 if based on their contract damages (or $38,200 if based on the entire ...