MARIA ORDONEZ ET AL VS AUTO FINANCE SOLUTIONS LLC ET AL

Tentative Rulings

Case Number: ****0259    Hearing Date: September 15, 2020    Dept: 24

Plaintiff Bel Air Dominion Investments LLC’s motion to disburse funds is DENIED. Defendant Auto Finance Solutions, LLC’s counter request to disburse the funds to partially satisfy the judgment is GRANTED.

Defendant Auto Finance Solutions, LLC’s motion for attorneys’ fees is GRANTED.

On October 17, 2017, Plaintiffs Maria Ordonez (“Ordonez”) and Bel Air Dominion Investments LLC (“BADI”) (collectively “Plaintiffs”) initiated this suit against Defendants Auto Finance Solutions, LLC (“AFS”) and Ihab Abuwarda (“Abuwarda”) (collectively “Defendants”) for breach of contract and fraud related to a financing agreement for wholesale car purchases. The Second Amended Complaint (“SAC”) alleges nine causes of action for 1) breach of oral agreement; 2) promissory fraud; 3) breach of fiduciary duty; 4) conversion; 5) money had and received; 6) breach of oral agreement; 7) promissory fraud; 8) slander of title; and 9) declaratory relief. On November 8, 2018, Defendants answered the SAC. On that same date, AFS filed a cross complaint against Cross-Defendants Juan Thola (“Thola”), Ordonez, and BADI (collectively “Cross-Defendants”) for breach of contract and declaratory relief.

On January 19, 2018, the Court granted Plaintiffs’ request for a preliminary injunction restraining AFS and its agents from “engaging in, committing, or performing, directly or indirectly, any and all acts associated with, or related to, a foreclosure sale of the real properties at issue. Plaintiffs submitted a $30,000.00 cash deposit in lieu of a bond in support of this injunction.

A bench trial in this matter commenced on October 15, 2019. On February 7, 2020, the Court issued a statement of decision finding in favor of Defendants/Cross-Complainants and against Plaintiffs/Cross-Defendants on the Complaint and Cross-Complaint. On March 18, 2020, the Court issued a judgment against Plaintiffs for $234,108.71 on the Cross-Complaint, and Plaintiffs took nothing from their Complaint.

On June 8, 2020, AFS filed a motion for attorneys fees. On September 1, 2020, BADI and Thola filed an opposition. On September 8, 2020, AFS filed a reply.

On June 19, 2020, BADI filed a motion to release the cash deposit related to the injunction. On September 1, 2020, AFS filed an opposition. On September 8, 2020, BADI filed a reply.

Attorneys’ Fees Legal Standard

With respect to attorney fees and costs, unless they are specifically provided for by statute (e.g., CCP ;; 1032, et seq.), the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties. (CCP ; 1021.) The prevailing party on a contract, which specifically provides for attorney fees and costs incurred to enforce the agreement, is entitled to reasonable attorney fees in addition to other costs. (Civ. Code ; 1717(a); CCP ;; 1032, 1033.5(a)(10)(A).) The court, upon notice and motion by a party, shall determine the prevailing party and shall fix, as an element of the costs of suit, the reasonable attorney fees. (Civ. Code ; 1717(a), (b).) Any notice of motion to claim attorney fees as an element of costs under shall be served and filed before or at the same time the memorandum of costs is served and filed; if only attorney fees are claimed as costs, the notice of motion shall be served and filed within the time specified in CRC 3.1700 for filing a memorandum of costs. (CRC 3.1702; Gunlock Corp. v. Walk on Water, Inc. (1993) 15 Cal.App.4th 1301, 1303, fn. 1.)

“It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court, whose decision cannot be reversed in the absence of an abuse of discretion. [Citation.]” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623 624.) The fee setting inquiry in California ordinarily “begins with the ‘lodestar’ [method], i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154.) “[A] computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.” (Margolin v. Reg’l Planning Comm’n (1982) 134 Cal.App.3d 999, 1004.) The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. (See Serrano v. Priest (1977) 20 Cal.3d 25, 49 [discussing factors relevant to proper attorneys’ fees award].) Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. (Id. at 48, fn. 23.) The factors considered in determining the modification of the lodestar include “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award.” (Mountjoy v. Bank of Am. (2016) 245 Cal.App.4th 266, 271.)

In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence. (Premier Medical Management Systems, Inc. v. California Ins. Guaranty Assoc. (2008) 163 Cal.App.4th 550, 564.) General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice. (Ibid.)

Attorneys’ Fees Discussion

Here, AFS presents prima facie evidence concerning the fees incurred in this case for a total amount of $234,108.71. (S. Wiseman Decl., ¶ 3; B. Wiseman Decl., ¶¶ 6-10.) However, AFS does not seek the full amount of fees. In the interest of eliminating any potential conflicts regarding duplicative fees, AFS voluntarily seeks only $187,855.37. By way of their counsels’ sworn declarations affirming these fees, AFS has met its initial burden to show that they are entitled to fees and the amount of reasonable fees.

BADI and Thola do not object to the reasonableness of the amount of the fees. Instead, they only opposes on the sole basis that AFS was not a prevailing party. This position is nonsensical. Somehow, BADI and Thola reason that because they recovered nothing by way of their Complaint, and that AFS prevailed on their cross-complaint against them, there is no winner or that they are somehow the prevailing party. How does a $234,108.71 judgment against a party that lost on all of their independent claims actually make them the prevailing party? The negligible “success” on the declaratory relief action does not override AFS’s overwhelming successes on both the complaint and cross-complaint. As should be self-evidently clear, AFS is the prevailing party. To say the least, AFS was the prevailing party on the first cause of action in the cross-complaint for breach of contract, which is a sufficient basis for fees here. The Court does not find that it has the discretion to declare no prevailing party for these same reasons.

As the opposing parties do not dispute the reasonableness of the fees, and the prima facie evidence is sufficient to establish the reasonableness of the fees, AFS’s motion for fees is GRANTED as requested.

Disburse Funds Legal Standard

CCP section 995.430 states:

A bond remains in force and effect until the earliest of the following events:

(a) The sureties withdraw from or cancel the bond or a new bond is given in place of the original bond.

(b) The purpose for which the bond was given is satisfied or the purpose is abandoned without any liability having been incurred.

(c) A judgment of liability on the bond that exhausts the amount of the bond is satisfied.

(d) The term of the bond expires. Unless the statute providing for the bond prescribes a fixed term, the bond is continuous.

CCP section 995.730 provides that a “deposit given instead of a bond has the same force and effect, is treated the same, and is subject to the same conditions, liability, and amount, as the bond.”

CRC, Rule 3.1130(c) states, “an original bond or undertaking may be withdrawn from the files and delivered to the party by whom it was filed on order of the court only if all parties interested in the obligation so stipulate, or upon a showing that the purpose for which it was filed has been abandoned without any liability having been incurred.”

Disbursement Discussion

BADI requests that the deposited funds from the preliminary injunction bond be released to them. In reply, BADI changes this request to disburse the funds to their attorneys, who they claim have a lien on the bond. BADI argues that the purpose for the deposit was abandoned without any liability having been incurred. BADI’s request is inappropriate for the simple reasons that the purpose of the bond has not been abandoned and BADI incurred liability in this case. As noted, BADI took nothing by way of its complaint and, indeed, incurred liability on the cross-complaint.

Further, the purpose of the bond has not been satisfied. The undertaking was for the purpose of securing damages BADI may have sustained by way of the injunction if the court decided that plaintiff was not entitled to the injunction. The Court even observed that:

Defendant presumably will incur attorney's fees litigating Plaintiff's ninth cause of action through trial, upon which the preliminary injunction is based. Defendant also may incur additional costs in protecting its interest in the Properties pending trial. Its ability to sell the Properties and recover its principal will also be delayed, which could result in loss of interest or other damages. Subject to further argument at the hearing, the court concludes that an undertaking of $30,000 is appropriate.

(01/18/18 Minute Order, at pp. 15-16.)

Here, AFS incurred fees litigating the ninth cause of action and their ability to sell the properties and recover its principal was also delayed. AFS may rightly recover from the deposit on that basis. BADI fails to justify their request while these issues are still outstanding.

BADI argues that the injunction did not restrain AFS’s ability to foreclose, and thus the purpose of the injunction was complete when the Court made its determination on the declaratory relief cause of the complaint. This notion is dispelled by inspecting the actual language of the injunction. The injunction, that BADI itself requested, states clearly that AFS and its agents were restrained from “engaging in, committing, or performing, directly or indirectly, any and all acts associated with, or related to, a foreclosure sale of” the real properties at issue. (See 01/19/18 Injunction.) These terms plainly restrained AFS, during the pendency of this action, from instituting a new foreclosure process. Thus, this argument is not factually supported by the text of the injunction.

BADI’s new, non-responsive arguments to this end in reply are not considered. In any event, they are unpersuasive. For example, BADI argues for the first time in reply that their counsel actually should receive the deposit because BADDI assigned the cash deposit to their counsel on October 8, 2019 and that a separate attorney lien has priority over the judgment. BADI presents no authority that their assignment to their attorneys or an attorney lien may properly attach to a bond supporting preliminary injunction. The Court doubts that such authority exists, as a party could make any bond essentially meaningless if they could assign and somehow take priority over the purpose for which a bond was taken.

Further, BADI’s contention that the one action rule would preclude recovery here is also baseless. (See Scalese v. Wong (2000) 84 Cal. App. 4th 863, 869 [“If the creditor sues on the note, disregarding the security, and the debtor allows personal judgment to go against him without objecting on that ground, the creditor elects the single remedy of a personal action and cannot thereafter foreclose...”].) Assuming the one action rule applies, then AFS would only be precluded from foreclosing after the money judgment. Thus, AFS was still improperly restrained from issuing new notices during the pendency of the suit. Damages stemming from the injunction would still exist between the injunction and the date of judgment despite this rule.

Accordingly, Plaintiff’s motion is DENIED.

AFS presents a counter request that the funds be disbursed to them to cover, in part, the judgment here. The Court agrees that AFS is entitled to collect as against BADI’s deposit for this outstanding judgment. (See CCP ; 128(a)(4); see also Brown v. Brown (1971) 22 Cal.App.3d 82, 84; Blueberry Properties, UC v. Chow (2014) 230 Cal.App.4th 1017, 1021.) The Court will therefore disburse the funds to AFS and order them to file a corresponding partial satisfaction of judgment.

Moving party is ordered to give notice.