Lodestar/Laffey Matrix/Substantiation Of Reasonableness Of Fees: $843,245.27 Civil Code Section 1717 Fee Request/Award Affirmed On Appeal

 

Successful Defendants Substantiated Hours and Hourly Rate Very Well In This One.

     Syers Properties III, Inc. v. Rankin, Case No. A137610 (1^st Dist., Div. 2 May 5, 2014) (unpublished) is a case where a $843,245.27 defense fee award under Civil Code section 1717 was challenged on narrow grounds—with plaintiff disputing the reasonableness of hours claimed and the hourly rate being requested. Because these determinations are determined under a deferential abuse of discretion standard, plaintiff did not prevail on appeal.

     As far as reasonableness of hours claimed, the defense provided detailed declarations by counsel showing (1) attorney’s qualifications and experience, (2) the stages or motions in the litigation in which counsel had been primarily engaged, and (3) the hours billed to defendants within several specific litigation categories, with the defense providing a time bar graph for each category of work performed. Because the lower court could credit the defense declarations of counsel as to work performed, nothing more was required. In fact, the categorical breakout of time was found sufficient, based on a district court decision favoring this approach. (In re HPL Technologies, Inc. Sec. Litig., 366 F. Supp.2d 912, 920 (N.D. Cal. 2005) [categorical approach is “an especially helpful compromise between reporting hours in the aggregate (which is easily to review, but lacks informative detail) and generating a complete line-by-line billing report (which offers great detail, but tends to obscure the forest for the trees)”].)

     So, what about the hourly rate being requested by prevailing defense counsel? The defense relied on counsel declarations about reasonableness of rate, bolstered by the Laffey Matrix rates adjusted to the San Francisco area by using locality pay tables. Plaintiff, however, argued that the rates were exorbitant because insurance defense firms charged much below the prevailing market rates so that they were stuck with these lower hourly rates. On review, the appellate court found that the real inquiry was looking to hourly rates compensating for the difficulty or complexity of the matter in the court venue at issue. The standard is not tied to the actual rate billed, but the reasonable market rate. (Nemecek & Cole v. Horn, 208 Cal.App.4^th 641, 652 (2012).) Defense counsel did rely on a regionally-adjusted Laffey Matrix, which the appellate court dealt with this way: “. . . the trial court was neither required to follow the Laffey Matrix nor to adopt the rate defense counsel opined was the ‘market rate’ for the services of this type.” However, the lower court did credit the Laffey Matrix (adjusted or otherwise), so be it. However, in further reasoning, the reviewing court did indicate the lower court has considerable discretion to determine the proper market for work being charged, whether insurance defense litigation versus general civil litigation. Based on this “market” definition, the hourly rate could be limited based on the demarcation. “Again, we emphasize that such determinations lie within the broad discretion of the trial court.” (Slip Opn., p. 12.) Fee award affirmed—no abuse of discretion.

     For a discussion of mediation confidentiality in the companion case, Syers Properties III, Inc. v. Rankin, Case No. A136018, see the May 6, 2014 blawg post on California Mediation and Arbitration.