BANK OF THE WEST VS. KARAPET MOMDJIAN

Tentative Rulings

Case Number: PC047509    Hearing Date: November 09, 2020    Dept: F49

Dept. F-49

Calendar # 7

Date: 11-9-20 c/f 10-8-20 c/f 5/12/20

Case #PC047509

ATTORNEY FEES

MOVING PARTY: Plaintiff, Bank of the West

RESPONDING PARTY: Defendant, Karapet Momdjjian

RELIEF REQUESTED

Motion for Attorney Fees

SUMMARY OF ACTION

On March 26, 2009, Defendant Karapet Momdjjian purchased a vehicle for $40,000. Plaintiff obtained a $38,382.54 loan for the purchase of the vehicle. Plaintiff defaulted on the loan on August 26, 2009, and retained the vehicle. An outstanding balance of $36,155.42 remained at the time of the filing of the complaint.

On February 10, 2010, Plaintiff filed its complaint against Karapet Momdjian for breach of contract, claim and delivery, account stated and open book account. On July 7, 2018, Plaintiff filed first amended complaint. The first amended complaint added defendants Mega Auto Dismantling, Inc. and Nazaryan Oganos.

The clerk entered default against Momdjjian on June 10, 2011. On July 8, 2010, the court, on its own order, set aside the default against Momdijian. Plaintiff again served Momdjian on August 14, 2010 via substituted service. The clerk again entered default on June 10, 2011.

On October 12, 2012, Plaintiff dismissed Mega Auto Dismantling, Inc. and Nazaryan Oganos.

On November 5, 2012, the court entered a default judgment against Karapet Momdjjian for $108,483.66.

On April 25, 2019, the court vacated the default judgment on grounds of equity. Defendant answered the complaint on May 1, 2019.

On November 7, 2019, the court granted the motion for summary judgment subject to a determination of an amount of damages based on the outstanding principal and interest calculations following payment on the restitution order. On February 7, 2020, the court determined the total amount due as 4223.96. The court also vacated the March 16, 2020 trial date.

On February 14, 2020, Plaintiff filed a memorandum of costs and motion for attorney fees.

On March 5, 2020, the court entered judgment for $223.96, and allowing for the recovery of costs and attorney fees.

On October 27, 2020, the court granted in part and denied in part the motion to tax costs.

RULING: Denied.

Objections: Overruled.

Plaintiff Bank of the West moves for the recovery of $57,764.73 in attorney fees. Plaintiff moves for attorney fees on grounds that it was the prevailing party on the underlying contract based on its net monetary recovery, which led to a final judgment. The requested fees depend on fees provided by attorney Mark Blackman of the law firm Alpert, Barr & Grant. [Declaration of Shawn Olson.] Nothing in the Olson declaration indicates any individually billed hours. The declaration of Blackman was submitted on October 30 2012 strictly in support of the default judgment entered on November 5, 2012. The court awarded $57,764.73 in attorney fees.

Defendant in opposition contends that because plaintiff only recovered a nominal sum, Plaintiff is not the prevailing party in the action. Defendant next contends that any fees are strictly limited to the contractual recovery, and Plaintiff improperly seeks to collect fees incurred for the case against the other defendants. Defendant further asserts that seeking $57,764.73 in fees for a $223.96 fee recovery is not reasonable. Defendant alternatively concedes that Plaintiff may only seek up to $1,425 in fees as described in the Blackman declaration. [See Decl. of Mark Blackman., ¶ 19.]

Plaintiff in reply contends it is the prevailing party, and reiterates the requested attorney fees were previously scrutinized and approved in the prior default judgment. Plaintiff states that consideration of the recovery should include the $36,000 restitution judgment as well.

Code of Civil Procedure section 1021 provides that “[e]xcept as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” A prevailing party in entitled to recover costs, including attorneys’ fees when authorized by contract. (Code Civ. Proc., §§ 1032(a)(4); 1033.5(a)(10)(A).) “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….” (Civ. Code, § 1717, subd. (a).)

(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.

(2) Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.”

(Civ. Code, § 1717, subd. (b).)

“[I]n deciding whether there is a ‘party prevailing on the contract,’ the trial court is to compare the relief awarded on the contract claim or claims with the parties' demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources. The prevailing party determination is to be made only upon final resolution of the contract claims and only by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’”  (Hsu v. Abbara (1995) 9 Cal.4th 863, 876; Acree v. General Motors Acceptance Corp. (2002) 92 Cal.App.4th 385, 400 [“The Civil Code section 1717 phrase ‘greater relief ... on the contract” does not necessarily mean greater monetary relief’”]; DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 973; see Bowman v. City of Berkeley (2005) 131 Cal.App.4th 173, 177-178.) “As one Court of Appeal has explained, “‘[t]ypically, a determination of no prevailing party results when both parties seek relief, but neither prevails, or when the ostensibly prevailing party receives only a part of the relief sought.’” (Hsu v. Abbara, supra, 9 Cal.4th at p. 875.) “We agree that in determining litigation success, courts should respect substance rather than form, and to this extent should be guided by “‘equitable considerations.’” (Id. at p. 877.)

Recovery of attorney fees is limited to those fees necessarily incurred in prevailing on the claim. (Civil Code § 1717; Santisas v. Goodin (1998) 17 Cal.4th 599, 622 [“a court may base its attorney fees decision on a pragmatic definition of the extent to which each party has realized its litigation objectives, whether by judgment, settlement, or otherwise”].) An award should therefore reflect only those fees necessarily incurred for prevailing against Karapet Momdjjian.

In addition to the contract claim against Momdjjian for the principal balance due on the retail installment contract, Plaintiff also sued and later dismissed Mega Auto Dismantling, Inc. and Nazaryan Oganos. As to Momdjjian, following the application of payment from the restitution order, Plaintiff only obtained a nominal net monetary recovery of $223.96 (principal balance of $155.42, plus interest of 9.24% from May 2, 2015) against Momdjjian after initially seeking $36,155.42 on the breach of contract cause of action. Nothing in the application demonstrates any efforts from Plaintiff’s counsel that led to the 99+% recovery of the principal balance in the criminal restitution prosecution.

As required by law, the declaration of Blackman lacks any description of the specific work done in regards to the actual recovery of the principal balance recovery claim, and the billing statements only offer limited, redacted entries showing revisions of the complaint, court appearances, preparation of the default, discovery, mediation, settlement negotiations, email correspondence, and phone calls. It’s not clear whether any propounded discovery was actually served on Defendant after the preparation for default began, or whether the discovery was served on the later dismissed parties. The declaration also lacks address of any relationship between the mediation or entries referencing the Department of Motor Vehicles. Meanwhile the entries show nothing related to the criminal prosecution, which Plaintiff relies upon, at least in part, for the subject recovery.

Even considering the entire action, the issue remains as to how much of the actual billable statements were property and exclusively attributable to Momdjjian. The subject action was initially an action for collection of a balance due on a retail installment contract. Upon the discovery of the dismantling of the vehicle, Plaintiff added new defendants. Said conduct of co-defendants changed the scope of recovery.

Missing from the declaration of counsel in support of the instant motion, the motion itself or reply, is any finding that the attorney fees are so “inextricably intertwined” the court cannot separate billing related strictly to the recovery of funds from the alleged wrongful conduct of the now dismissed defendants or government entities like the Department of Motor Vehicles. (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129–30; Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1111.)

The prior award of attorney fees in the default judgment will not automatically support the conclusion that the full fees awarded remain collectible now. Plaintiff correctly contends it recovered the full $36,155.42 principal balance due on the contract. Nevertheless, the motion relies on a fundamental assumption that this court should also award attorney fees for sums recovered in the prior criminal restitution process. While the court granted the full requested amount of attorney fees, at the time of entry of the default judgment, no restitution payment was made. The $36,000 restitution payment was only made on May 1, 2015—almost three years after the default judgment. It was only upon subsequent challenge and review that the court found Defendant was entitled to a substantial credit on the principal balance claimed owed.

Considering all the equitable factors, lack of argument and evidence regarding the right to collect for the successful restitution action, the other parties and non-related contract claims, plus the less than one percent successful recovery in the instant action, Plaintiff has not met the burden for establishing a finding of a prevailing party. Plaintiff’s decision to proceed on the action constituted a calculated risk for recovery of fees.

The motion for attorney fees is denied on grounds that Plaintiff fails to establish itself as a prevailing party on the action.

Defendant to give notice.

Case Number: PC047509    Hearing Date: October 27, 2020    Dept: F49

Dept. F-49

Calendar # 6

Date: 10-27-20 c/f 6-8-20

Case #PC047509

TAX COSTS

MOVING PARTY: Defendant, Karapet Momdjjian

RESPONDING PARTY: Plaintiff, Bank of the West

RELIEF REQUESTED

Motion to Tax Costs

SUMMARY OF ACTION

On March 26, 2009, Defendant Karapet Momdjjian purchased a vehicle for $40,000. Plaintiff obtained a $38,382.54 loan for the purchase of the vehicle. Plaintiff defaulted on the loan on August 26, 2009, and retained the vehicle. An outstanding balance of $36,155.42 remained at the time of the filing of the complaint.

On February 10, 2010, Plaintiff filed its complaint against Karapet Momdjian for breach of contract, claim and delivery, account stated and open book account. On July 7, 2018, Plaintiff filed first amended complaint. The first amended complaint added defendants Mega Auto Dismantling, Inc. and Nazaryan Oganos.

The clerk entered default against Momdjjian on June 10, 2011. On July 8, 2010, the court, on its own order, set aside the default against Momdijian. Plaintiff again served Momdjian on August 14, 2010 via substituted service. The clerk again entered default on June 10, 2011.

On October 12, 2012, Plaintiff dismissed Mega Auto Dismantling, Inc. and Nazaryan Oganos.

On November 5, 2012, the court entered a default judgment against Karapet Momdjjian for $108,483.66.

On April 25, 2019, the court vacated the default judgment on grounds of equity. Defendant answered the complaint on May 1, 2019.

On November 7, 2019, the court granted the motion for summary judgment subject to a determination of an amount of damages based on the outstanding principal and interest calculations following payment on the restitution order. On February 7, 2020, the court determined the total amount due as 4223.96. The court also vacated the March 16, 2020 trial date.

On February 14, 2020, Plaintiff filed a memorandum of costs and motion for attorney fees.

On March 5, 2020, the court entered judgment for $223.96, and allowing for the recovery of costs and attorney fees.

RULING: Granted in Part/Denied in Part.

Defendant, Karapet Momdjjian moves to tax memorandum of costs items 1(b), 1(c), 4(a), 5(b-c), and item 16—total costs of $1,916.50. Defendant first contends that Plaintiff is not a prevailing party on the action as to Defendants Mega Auto Dismantling, Inc. and Nazaryan Oganos. Items 1(b), 1(c), 4(a), 5(b-c) all constitute expenses incurred in the prosecution of the action against the other named and later dismissed defendants. Defendant also disputes the $288 in CourtCall fees as unnecessary. Defendant does not challenge cost items 1(a), 1(d), 5(a), and 14.

Plaintiff in opposition contends it is the prevailing party against the primary defendant, and therefore entitled to recover costs against moving defendant.

“‘Prevailing party’ includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.”

Code Civ. Proc., § 1032

Code of Civil Procedure section 1033.5 sets forth the costs recoverable by the prevailing party. To recover a cost, it must be reasonably necessary to the litigation and reasonable in amount. (Perko’s Enterprises, Inc. v. RRNS Enterprises (l992) 4 Cal.App.4th 238, 244.) If the items appearing in a cost bill appear to be proper charges, the burden is on the party seeking to tax costs to show that they were not reasonable or necessary. (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-74.) On the other hand, if the items are properly objected to, they are put in issue and the burden of proof is on the party claiming them as costs. (Id.)

Costs not expressly permitted under CCP § 1033.5(a), but not expressly denied under CCP§ 1033.5(b), may be recovered in a court’s discretion. (Science Applications International Corporation v. Superior Court (1995) 39 Cal.App.4th 1095, 1103.) In reviewing a motion to tax costs, a guiding principle is that all costs must be “reasonably necessary to the litigation” and “reasonable in need and amount.” (Acosta v. SI Corporation (2005) 129 Cal.App.4th 1370, 1380.) If an item of cost is expressly allowed by statute and if items appear on their face to be proper, the verified memorandum of costs is prima facie evidence of their propriety, shifting the burden of proof to the objecting party to show that the items were unnecessary or unreasonable. (Ibid.; Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131-132.) “Only after such costs are challenged by a motion to tax do the parties need to justify their claims by submitting documentation of the costs they have incurred.” (Bach v. County of Butte (1989) 215 Cal.App.3d 294, 308.)

Courts have discretion to disallow costs that were unreasonably incurred. (Michell v. Olick (1996) 49 Cal.App.4th 1194, 1201.) Cost awards are reviewed under an abuse of discretion standard. (El Dorado Meat Co. v. Yosemite Meat and Locker Service, Inc. (2007) 150 Cal.App.4th 612, 616; Gibson v. Bobroff (1996) 49 Cal.App.4th 1202, 1209.)

Plaintiff initially sued Momdjjian on a contract claim for the principal balance due on the retail installment contract. Plaintiff also sued Mega Auto Dismantling, Inc. and Nazaryan Oganos. upon the discovery of the dismantling of the vehicle. Defendant in reply reiterates that both Defendants were later dismissed. On March 5, 2020, the court entered judgment for $223.96 against Momdjjian only.

Momdjjian offers no dispute to the costs directly imputed to work on the case against him. Plaintiff offers the argument that the dismissed actions against Mega Auto Dismantling, Inc. and Nazaryan Oganos were still integral to the judgment against Momdjjian without legal support or articulation of how an action for the dismantling of the auto relates to the breach of retail installment contract action. (DeSaulles v. Community Hospital of Monterey Peninsula (2016) 62 Cal.4th 1140, 1154.)

Without the presentation of a sufficient nexus, the court finds the expenses in items 1(b), 1(c), 4(a), 5(b-c) unsupported, and therefore grants the motion to tax on these items. The court finds the Courtcall expenses in item 16 reasonable, rather than a convenience however, and therefore denies the motion as to this item. (Heppler v. J.M. Peters Co.

Motion for Attorney Fees on calendar for November 9, 2020.

Moving Defendant to give notice.