United States District Court, E.D. California
ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR
ATTORNEYS' FEES. COSTS. AND INTEREST (Doc. No.
matter involves a breach of contract dispute concerning the
provision of various fee collection services performed by
plaintiff and counter-defendant Firstsource (hereinafter
"plaintiff or "Firstsource") on behalf of
defendant and counter-claimant Tulare Regional Medical Center
(hereinafter "defendant" or "TRMC"). This
matter is currently before the court on plaintiffs motion for
attorneys' fees, costs, and interest. (Doc. Nos. 98,
105.) Following submission of requested supplemental
briefing, on December 18, 2018, the case again came before
the court for hearing. Attorneys Emily Feinstein and Patrick
Proctor-Brown appeared telephonically on behalf of
plaintiffs, and attorney Benjamin Nicholson appeared in
person on behalf of defendants. Having considered the
parties' briefing, and having heard the oral arguments of
counsel, the court will grant plaintiffs motion in part.
case concerns a dispute over billing-related services
provided by plaintiff to defendant. Virtually all the salient
facts were undisputed. The parties entered a valid contract
on November 18, 2010 in which plaintiff agreed to perform
billing and other business services for defendant. (Doc. No.
62 at 4-6.) Plaintiff was to receive a contingency fee of
3.75 percent of the total fee payments that it collected for
defendant. (Id. at 6.) The contract stated defendant
would pay invoices monthly and be liable for a service charge
of 1.5 percent per month for any invoices unpaid after more
than thirty days. (Id. at 9.) The contract also
included a fee-shifting provision that states: "In the
event of any default of the payment provision herein, [TRMC]
agrees to pay, in addition to any defaulted amount, all
actual legal costs, including but not limited to, attorney
fees, collection costs and court costs First source has
incurred to collect the overdue amount." (Doc. No. 98-1
terminated the agreement by letter on September 11, 2014, to
be effective May 31, 2015. (Doc. No. 62 at 11.) Plaintiff
continued to perform services for defendant between September
11, 2014 and May 31, 2015. (Id. at 12.)
Nevertheless, defendant failed to pay plaintiff for services
rendered during this period. (Id. at 14-15.)
Plaintiff invoiced defendant for $724, 385.08, which
defendant refused to pay. (Id. at 16-23.) Plaintiff
began assessing late fees on unpaid invoices in January 2015.
(Id. at 25.)
filed this suit on July 21, 2015 alleging one claim for
breach of contract in its complaint. (Doc. No.
I.) On June
13, 2018, the court granted summary judgment in favor of
plaintiff. (Doc. No. 93.) On July 12, 2018, plaintiff filed a
motion for attorneys' fees. (Doc. Nos. 98, 99.)
Plaintiffs motion for attorneys' fees first came before
the court for hearing on August 21, 2018. (Doc. No. 104.)
During the hearing, the court granted both parties permission
to submit supplemental briefing addressing the lodestar
analysis. Plaintiff submitted supplemental briefing on
September 19, 2018. (Doc. Nos. 105, 106.) Defendant submitted
an opposition and objections on October 2, 2018. (Doc. Nos.
107, 108.) Plaintiff submitted a reply on October 9, 2018.
(Doc. No. 109.)
argues that it is the prevailing party in this action, having
both secured a judgment for the service fees that defendant
failed to pay and defeated defendant's counterclaim.
(Doc. No. 98-1 at 3.) Therefore, plaintiff contends that it
is entitled to reasonable attorneys' fees, actual legal
costs, and prejudgment interest. (Id.)
Contractual Agreement for Attorneys'
asserts that it should be awarded its actual attorneys'
fees pursuant to the fee-shifting provision of the
parties' contract. Plaintiff argues it is entitled to an
award in the amount of the attorneys' fees that it paid
to its counsel (hereinafter "Quarles & Brady"
or "plaintiffs counsel"). (Doc. No. 98-1 at 3-12.)
federal litigation, the American Rule generally precludes an
award of attorneys' fees absent statutory authorization
or an enforceable contractual fees provision."
Golden Pisces, Inc. v. Fred WahlMarine Const, Inc.,
495 F.3d 1078, 1081 (9th Cir. 2007); see also MRO Commc
'ns, Inc. v. Am. Tel. & Tel. Co., 197 F.3d 1276,
1281 (9th Cir. 1999) (describing the "American
Rule" in which "each party must bear its own
attorneys' fees in the absence of a rule, statute or
contract authorizing such an award").
when there is an enforceable contractual fees provision,
federal courts apply state law in awarding attorneys'
fees. See Resolution Tr. Corp. v. Midwest Fed. Sav. Bank
of Minot, 36 F.3d 785, 800 (9th Cir. 1993) (noting that,
where award of attorneys' fees was premised on
contractual provision, "the district court should have
applied California law in interpreting the attorneys'
fees provision in the contract") (citing Hellon
& Assoc, Inc. v. Phoenix Resort Corp., 958 F.2d 295,
300 (9th Cir. 1992)); Krug v. Wells Fargo Bank,
N.A., No. 11-CV-5190 YGR, 2012 WL 3257814, at *1 (N.D.
Cal. Aug. 8, 2012) ("State law governs the
interpretation and application of contractual attorneys'
fees provisions."); Lyon Fin. Servs., Inc. v.
Tomlinson, No. CV-10-0067-PHX-JAT, 2011 WL 977702, at *1
(D. Ariz. Mar. 18, 2011) ("Where a contract provides for
an award of fees to the prevailing party, both California and
Arizona state law require the Court to honor that provision
and award fees, as stipulated in the contract.").
law permits parties to include provisions in contractual
agreements that explain how the parties wish to account for
attorneys' fees that may arise from disputes related to
the contract. See Cal. Civ. Proc. Code §§
1021, 1033.5(a)(10); Xuereb v. Marcus & Millichap,
Inc., 3 Cal.App.4th 1338, 1341 (1992) ("It is quite
clear from the case law interpreting Code of Civil Procedure
section 1021 that parties may validly agree that the
prevailing party will be awarded attorney fees incurred in
any litigation between themselves, whether such litigation
sounds in tort or in contract."). Courts look to the
language of the agreement between the parties to determine
the extent of attorneys' fees covered. See Monster,
LLC v. Superior Court, 12 Cal.App. 5th 1214, 1226 (2017)
("[Although] [t]he parties to a contract are free to
agree that one or more of them shall recover their attorney
fees if they prevail on a tort or other noncontract claim, .
. . the right to recover those fees depends solely on the
contractual language.") (quoting Brown Bark III,
L.P. v. Haver, 219 Cal.App.4th 809, 820 (2013));
Cruz v. Ayromloo, 155 Cal.App.4th 1270, 1277 (2007)
(awarding attorneys' fees for tort claims based on
"the broad language of the attorneys' fees clause in
the lease agreement [which] covered all fees in any civil
action stemming from the lease"); Thompson v.
Miller, 112 Cal.App.4th 327, 336-37 (2003) (holding that
an attorneys' fee award appropriate with respect to tort
claims related to contractual provisions, based on the broad
language of contract); Santisas v. Goodin, 17
Cal.4th 599, 608 (1998) ("If a contractual attorney fee
provision is phrased broadly enough ... it may support an
award of attorney fees to the prevailing party in an action
alleging both contract and tort claims."); Gerard v.
Salter, 146 Cal.App. 2d 840, 848 (1956) (disallowing
attorneys' fees for an arbitration because the contract
stated reasonable attorneys' fees would be awarded if
either party brought suit "in court").
case, the parties' contract contains the following
operative language: "In the event of any default of the
payment provision herein, [defendant] agrees to pay, in
addition to any defaulted amount, all actual legal costs,
including but not limited to, attorney fees, collection costs
and court costs [plaintiff] has incurred to collect the
overdue amount." (Doc. No. 1-1 at 2.) Defendant argues
that only the attorneys' fees incurred in
"collecting] the overdue amount" may be included in
an attorney fee award under the contract, and therefore any
time spent defending against its counterclaim should not be
included therein. (Doc. No. 100 at 7-8.) In its supplemental
briefing, defendant argues that "[g]iven the simplicity
of the complaint and the complexity of the counterclaim"
one third of the attorneys' fees should be apportioned to
the complaint, and two thirds should be apportioned to the
counterclaim. (Doc. No. 107 at 6.)
defendant's position in this regard, however, would
assign an impossible task to the court. As plaintiff
correctly notes, defendant's single counterclaim for
breach of contract was precisely the same as its affirmative
defense that plaintiff had materially breached the contract.
(Compare Doc. No. 6 at 4 (alleging an affirmative
defense of anticipatory repudiation based on plaintiffs
material breach of the contract), with Id. at 7
(alleging a counterclaim based on plaintiffs purported
material breach of the contract).) In its order granting
summary judgment in favor of plaintiff, the court concluded
that it would not consider evidence that the defendant failed
to disclose during discovery and, accordingly, rejected both
defendant's counterclaim and its affirmative defense due
to the absence of admissible evidence. (See Doc. No.
93 at 9-14.) As discussed in that order, the untimely
evidence which defendants put forward was "the sole
evidence before the court supporting defendant's
opposition, its affirmative defenses, and its
counterclaim." (Id. at 10.) Therefore, there is
no logical way to separate the attorney time expended
litigating the counterclaim from that spent litigating the
affirmative defense. See Reynolds Metals Co. v.
Alperson, 25 Cal.3d 124, 129-30 (1979)
("Attorney's fees need not be apportioned when
incurred for representation on an issue common to both a
cause of action in which fees are proper and one in which
they are not allowed."); Amtower v. Photon
Dynamics, Inc., 158 Cal.App.4th 1582, 1604
(2008) ("[Allocation is not required when the issues are
'so interrelated that it would have been impossible to
separate them into claims for which attorney fees are
properly awarded and claims for which they are
not.'") (quoting Akins v. Enterprise Rent-A-Car
Co., 79 Cal.App.4th 1127, 1133 (2000)); Yield
Dynamics, Inc. v. TEA Sys. Corp., 154 Cal.App.4th 547,
577 (2007) (same).
the court will not attempt to allocate attorney time between
that which was necessary to litigate plaintiffs claim and
that reasonably expended to defend against defendant's
counterclaim. Plaintiff may collect attorneys' fees for
time expended on both fronts.
original motion argued that attorneys' fees should be
awarded based on the actual legal fees paid. (See
Doc. No. 98-1 at 3.) At the hearing on August 21, 2018, the
court indicated that a lodestar analysis was necessary to
evaluate the reasonable attorneys' fees in this case and
permitted plaintiff the opportunity to provide supplemental
briefing addressing this issue. (See Doc. No. 104.) In that
supplemental briefing, plaintiff provided a lodestar analysis
and argued that the amount sought for attorneys' fees,
based on the fees actually paid by plaintiff, is reasonable
when cross-checked with the lodestar amount. (See
Doc. No. 105 at 2-10.)
typically use the traditional lodestar approach to calculate
attorneys' fees awardable under a contract. See,
e.g., Williams v. Wells Fargo Bank, N.A., No.
5:13-cv-03387-EJD, 2017 WL 4877439, at *l-2 (N.D. Cal. Oct.
30, 2017) (using lodestar method to determine contractual
attorneys' fees); Salameh v. Tarsadia Hotel, No.
O9cv2739-GPC(BLM), 2014 WL 3797283, at *2 (S.D. Cal. July 31,
2014) ("Attorneys' fees under California Civil
section 1717, the provision for attorney's fees in a
contract action, are calculated using the lodestar
method."); Meredith v. e-MDs, No. 14-cv-00899
JAM CMK, 2014 WL 2612112, at *4 (E.D. Cal. June 11, 2014)
("Traditionally, statutory/contractual attorneys'
fees are calculated using the 'lodestar'
calculation."); Suretec Ins. Co. v. BRC Const,
Inc., No. 2:11-cv-2813 KJM AC, 2013 WL 4676334, at *1
(E.D. Cal. Aug. 30, 2013) ("In California, 'the fee
setting inquiry . . . ordinarily begins with the
"lodestar," i.e., the number of hours reasonably
expended multiplied by the reasonable hourly
rate.'") (quoting PLCM Grp., Inc. v.
Drexler, 22 Cal.4th 1084, 1095 (2000)).
'lodestar' is calculated by multiplying the number of
hours the prevailing party reasonably expended on the
litigation by a reasonable hourly rate."
Camacho, 523 F.3d at 978 (quoting Ferland v.
Conrad Credit Corp., 244 F.3d 1145, 1149 n.4 (9th Cir.
2001)); see also Moreno v. City of Sacramento, 534
F.3d 1106, 1111 (9th Cir. 2008) ("The number of hours to
be compensated is calculated by considering whether, in light
of the circumstances, the time could reasonably have been
billed to a private client."). Applying these standards,
"a district court should exclude from the lodestar
amount hours that are not reasonably expended because they
are 'excessive, redundant, or otherwise
unnecessary.'" Van Gerwen v. Guarantee Mut. Life
Co., 214 F.3d 1041, 1045 (9th Cir. 2000) (quoting
Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)).
Reasonable Hourly Rates
assessing fee applications, the reasonable hourly rates are
calculated according to the prevailing market rates in the
relevant legal community. Blum v. Stenson, 465 U.S.
886, 895 (1984); Gonzalez v. City of Maywood, 729
F.3d 1196, 1205 (9th Cir. 2013); Ingram v.
Oroudjian, 647 F.3d 925, 928 (9th Cir. 2011) ("We
have held that '[i]n determining a reasonable hourly
rate, the district court should be guided by the rate
prevailing in the community for similar work performed by
attorneys of comparable skill, experience, and
reputation.'") (quoting Chalmers v. City of Los
Angeles, 796 F.2d 1205, 1210-11 (9th Cir. 1986));
Van Skike v. Dir., Office of Workers' Comp.
Programs, 557 F.3d 1041, 1046 (9th Cir. 2009);
Carson v. Billings Police Dep't, 470 F.3d 889,
891 (9th Cir. 2006). Typically, the "relevant legal
community" is the forum district and the local hourly rates for
similar work should normally be employed. Gonzalez,
729 F.3d at 1205; Prison Legal News, 608 F.3d at
454; Gates v. Rowland, 39 F.3d 1439, 1449 (9th Cir.
1994); Deukmejian, 987 F.2d at 1405.
parties state that the following hourly rates represent the
prevailing hourly rates in the Eastern District of
Plaintiffâs Requested Rates
Partners (20 years)
Partners (10-20 years)
Associates (4-10 years)
Associates (0-3 years)
defendant argues that plaintiffs requested rates are too high
to reflect the prevailing rates within Fresno. (Doc. No. 107
at 7-8.) Defendant argues that the cases and hourly rates
cited by plaintiff reflect a lodestar cross-check in a class
action settlement context and are therefore inapplicable
(id. at 8-9), and that plaintiffs use of the
"Laffey Matrix" methodology is also inapplicable
(id. at 9-10). Additionally, defendant argues that
the court should not award out-of-district attorney fee rates
in this case, because competent local counsel was available
to represent plaintiff. (Id. at 10-12.)
support of its argument that Quarles & Brady's actual
billing rates reflect the prevailing attorney fee rates in
this district, plaintiff points to several cases within this
district where similar rates have been found to be
reasonable. (Doc. No. 105 at 3-4.) Defendant, however,
counters that in those cases relied upon by plaintiff, the
judges of this district were merely conducting lodestar
cross-checks in the class action litigation context. (Doc.
No. 107 at 8-9.)
class actions, "the district court has discretion in
common fund cases to choose either the percentage-of-the-fund
or the lodestar method" in awarding attorneys' fees.
Vizcaino v. Microsoft Corp.,290 F.3d 1043, 1047
(9th Cir. 2002). When district courts award attorneys'
fees based upon the percentage of the fund, they may also
cross-check such an award by calculating the lodestar, which
"may provide a useful perspective on the reasonableness
of a given percentage award." Id. at 1051.
Where a lodestar is merely being used as a cross-check, the
court "may use a 'rough calculation of the
lodestar.'" Bond v. Ferguson Enters., Inc.,
No. 1:09-cv-1662 OWW MJS, 2011 WL 2648879, at *12 (E.D. Cal.
June 30, 2011) (quoting Fernandez v. Victoria Secret
Stores, LLC, No. CV 06-04149 MMM (SHx), 2008 WL 8150856
(CD. Cal. July 21, 2008)). In the context of a lodestar
cross-check, hourly rates are merely used as a secondary
method to evaluate the reasonableness of attorneys' fees
based upon the percentage ...