Court of Appeal Finds Fee Clause is Broad Enough to Encompass All Three Actions.
Under Civil Code section 1717, the key to recovering fees in disputes involving contract and tort claims often devolves to a determination of whether the fee clause is sufficiently broad to encompass matters “arising out of” or “concerning” the agreement in question. That breadth did occur in the next case we review, which concomitantly led to an affirmance of a sizable attorney’s fees award in favor of a landlord as against former tenants.
In Lippett v. Lembi, Case Nos. A115453, A116342, & A117583 (1st Dist., Div. 5 Nov. 17, 2009) (unpublished), landlord basically won three actions against tenants arising out of a lease with a fees clause—an initial action by which the lease was declared to have been forfeited (awarding back rent and an attorney’s fees award of $80,000), a second action in the lease battle by which the parties entered into a settlement agreement (under which tenants were to pay certain principal sums and the $80,000 prior fee award over time on an installment basis), and a third action alleging primarily torts against landlord, in which tenants requested reinstatement of the lease (the lease previously determined to have forfeited by tenants). Landlord successfully obtained summary judgment in the third action, with the trial court awarding landlord $82,050.50 in further attorney’s fees against tenants. Unhappy, tenants appealed.
And lost yet again.
The fees clause did have broad language, covering “any relief … , declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of rent or possession of the Premises, ….” The appellate panel found that this language was broad enough to justify fees in each of the three actions. (See, e.g., Santisas v. Goodin, 17 Cal.4th 599, 603, 608 (1998) [one of our Leading Cases]; Drybread v. Chipain Chiropractic Corp., 151 Cal.App.4th 1063, 1071-1072 (2007); Lerner v. Ward, 13 Cal.App.4th 155, 158-159 (1993); Xuereb v. Marcus & Millichap, Inc., 3 Cal.App.4th 1338, 1340, 1344 (1992).)
Tenants argued that the termination of the lease extinguished fee recovery, but this argument had been previously rejected in Care Constr., Inc. v. Century Convalescent Centers, Inc., 54 Cal.App.3d 701, 707 (1976), which held that a litigant is entitled to fees under section 1717 if the litigant succeeds in defending on the theory that there was no valid or enforceable lease.
Tenants next contended that fee recovery was forfeited because no request for fees was contained in landlord’s pleadings. Wrong, said the appellate panel, citing Allstate Ins. Co. v. Loo, 46 Cal.App.4th 1794, 1797-1798 (1996) and Dell Merk, Inc. v. Franzia, 132 Cal.App.4th 443, 454-455 (2005) to show this argument was contrary to California law.
Tenants also challenged landlord’s request to recover “fees on fees,” namely, the costs of preparing the fee motions. Wrong again; section 1717 cases do allow for recovery of such fee preparation expenses. (See, e.g., Bruckman v. Parliament Escrow Corp., 190 Cal.App.3d 1051, 1061-1062 (1987).)
Tenants made very generalized objections to the reasonableness of the sought-after fees, rhetorically claiming they were “excessive and unconscionable.” However, such generalized objections do not meet the objector’s burden to rebut the presumption that the fees were reasonably and necessarily incurred. (Hadley v. Krepel, 167 Cal.App.3d 677, 684 (1985).)
Tenants then argued that there was improper substantiation, because detailed time sheets were not submitted. Not so, said the panel, citing law to show that this is not necessary. (Wershba v. Apple Computer, Inc., 91 Cal.App.4th 224, 255 (2001); Sommers v. Erb, 2 Cal.App.4th 1644, 1651-1652 (1992); Martino v. Denevi, 182 Cal.App.3d 553, 559 (1986).) For differing judicial perspective on adequacy of substantiation for fee motions, see our category “Substantiation of Fee Requests” on the home page of our blog.
Finally, the court found nothing wrong with a $325 hourly rate (especially for a Harvard educated lawyer of more than 40 years experience), citing a case where a $300 per hour rate was found reasonable for a graduate of an unaccredited law school who had become a lawyer less than three years before undertaking the case. (See, e.g., Russell v. Foglio, 160 Cal.App.4th 653, 661-662 (2008).)