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Sayta v. Martin

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

April 7, 2017

SHAUNAK SAYTA, Plaintiff,
v.
BENNY MARTIN, Defendant.

          ORDER DENYING THE DEFENDANT'S MOTION FOR ATTORNEY'S FEES. RE: ECF NO. 52

          LAUREL BEELER United States Magistrate Judge.

         INTRODUCTION & BACKGROUND

         This case arises from an attorney-client relationship gone wrong. The court previously compelled arbitration of client Shaunak Sayta's[1] claims against attorney Benny Martin and confirmed a prior, fees-based arbitration award in favor of Mr. Martin.[2] The court assumes familiarity with the case and incorporates by reference the statement of facts in its prior order.[3]

         Mr. Martin, an attorney proceeding pro se in this litigation, now moves to collect attorney's fees “measured by the loss of income that he suffered as a result of” litigating the case.[4] He seeks to recover those “fees” on three grounds: (1) under the parties' agreement for attorney's fees in the event of a dispute (as authorized by California Civil Code section 1717); (2) as sanctions under 28 U.S.C. § 1927; and (3) as sanctions under the court's inherent authority.[5]

         The court can decide this matter without oral argument and vacates the hearing on April 13, 2017. Civil. L.R. 7-1(b). The court denies Mr. Martin's motion because he is not entitled to recover his opportunity costs and the court declines to impose those losses as a sanction on Mr. Sayta.

         ANALYSIS

         1. Mr. Martin Is Not Entitled to Attorney's Fees Under Civil Code Section 1717

         Mr. Martin's first claim for attorney's fees arises under the parties' contract and California Civil Code section 1717.[6] Section 1717(a) provides for the recovery of reasonable attorney's fees and costs to the prevailing party in a contract action:

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); Lucasfilm, Ltd. v. Canal Toys, No. C 11-01639 WHA, 2012 WL 685415, at *3 (N.D. Cal. Mar. 2, 2012).

         And, indeed, the parties' attorney-client fee agreement contains two fee provisions. First, it says, “[i]n the event it becomes necessary to institute an action at law to enforce this agreement or any part thereof, including recovery of fees and/or costs and expenses, the prevailing party in that action shall be entitled to recover reasonable attorney'[s] fees.”[7] Second, the agreement provides, the parties must arbitrate “any dispute with respect to this agreement, ” and that “[t]he prevailing party shall be entitled to recover reasonable attorney's fees, [whether] pro se or otherwise, in said [arbitration].”[8] Thus, Mr. Martin asserts, because there “can be no doubt that [he] was the prevailing party in this action, ” and because the contract provides for his recovery of attorney's fees, he is entitled to those fees under section 1717.[9]

         But Mr. Martin identifies the “twist” here: the parties are both attorneys that represented themselves pro se.[10] Mr. Martin asserts that “[n]o case law prohibits the parties' bargain” and that “there is no public policy conceivable for preventing a litigator that hires another litigator from agreeing to pay the other's reasonable fees.”[11]

         Not so. The California Supreme Court has held “that an attorney who chooses to litigate in propria persona and therefore does not pay or become liable to pay consideration in exchange for legal representation cannot recover ‘reasonable attorney's fees' under Civil Code section 1717.” Trope v. Katz, 11 Cal.4th 274, 292 (1995). The Trope Court “based its decision solely on the statutory interpretation of section 1717, and specifically on what it means to ‘incur' attorneys' fees.” Farmers Ins. Exch. v. Law Offices of Conrado Joe Sayas, Jr., 250 F.3d 1234, 1237 (9th Cir. 2001) (discussing Trope).

         Under Trope, “section 1717 applies only to contracts specifically providing that attorney['s] fees ‘which are incurred to enforce that contract' shall be awarded to one of the parties or to the prevailing party.” Trope, 11 Cal.4th at 280 (emphasis in original). “To ‘incur' a fee, of course, is to ‘become liable, '” and so a pro se attorney “cannot be said to ‘incur' compensation for his time and his lost business opportunities.” Id. And section 1717 applies only to “fees” -“the consideration that a litigant actually pays or becomes liable to pay in exchange for legal representation.” Id. In other words, an attorney proceeding pro se does not “incur” - or, does not actually pay or become liable to pay - “fees” measured by time spent and opportunities lost. Id. at 283; see Farmers, 250 F.3d at 1237 (“[T]he key to the analysis of section 1717 under Trope is the incurring of fees.”) (emphasis in original); In re Aureal, Inc., No. C 04-05100 ...


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