Warren v. Kia Motors America, Inc.

Filed 12/12/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
SHIRLEAN WARREN,
Plaintiff and Appellant, E068348
v. (Super.Ct.No. CIVDS1414575)
KIA MOTORS AMERICA, INC., OPINION
Defendant and Respondent.
APPEAL from the Superior Court of San Bernardino County. John M. Pacheco,
Judge. Reversed with directions.
Rosner, Barry & Babbitt, Hallen D. Rosner, Shay Dinata-Hanson, and Michelle A.
Cook for Plaintiff and Appellant.
Bowman and Brooke, Brian Takahashi, Joyce Peim; SJL Law, Julian G. Senior,
Stefanie G. Jo, and Marcelo Lee for Defendant and Respondent.
1
I. INTRODUCTION
A jury awarded plaintiff and appellant, Shirlean Warren, $17,455.57 in damages
pursuant to the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.)1 (the
Song-Beverly Act), commonly known as California’s “lemon law.” (Goglin v. BMW of
North America, LLC (2016) 4 Cal.App.5th 462, 467, fn. 5 (Goglin).) As part of the
judgment, the court awarded Warren $115,848.24 in attorney fees and $24,436.65 in
costs and expenses. (§ 1794, subd. (d).)
In this appeal, Warren challenges her attorney fee award and her costs and
expenses award. In the trial court, Warren requested $526,582.89 in attorney fees
($351,055.26 in lodestar fees, times a multiplier of 1.5) and $40,151.11 in costs and
expenses. The court applied a negative multiplier of 33 percent (33%) to the lodestar
figure of $351,055.26, resulting in the $115,848.24 attorney fee award ($351,055.26
times .33 equals $115,848.24). The court disallowed two items listed in Warren’s
memorandum of costs: (1) $9,832.46 in prejudgment interest on the $17,455.57
judgment; and (2) $5,882 for court reporters’ trial transcripts. ($40,151.11, less $5,882,
less $9,832.46, equals $24,436.65.)
Warren claims the court abused its discretion in applying a 33% negative
multiplier to her requested lodestar attorney fees. Warren argues that, by applying the
negative multiplier, the court erroneously limited her attorney fee award to a proportion
1 Undesignated statutory references are to the Civil Code unless otherwise
indicated.
2
of her $17,455.57 damages award, and thus used a prohibited means of determining
reasonable attorney fees. She also claims she was entitled to recover prejudgment
interest on her damages award and that the court erroneously struck the $5,882 expense
for trial transcripts from her cost bill.
We conclude that Warren has not shown she was entitled to prejudgment interest
on her jury award as a matter of right. (§ 3287, subd. (a).) Nor has Warren shown that
the court abused its discretion in refusing to award any prejudgment interest. (§ 3287,
subd. (b).) We agree, however, that Warren was entitled to recover the $5,882 expense
that her attorneys incurred for trial transcripts. (§ 1794, subd. (d).)
We also conclude the court abused its discretion in applying the 33% negative
multiplier to Warren’s requested lodestar attorney fees of $351,055. Part of the court’s
expressed purpose in applying the negative multiplier was to tie the attorney fee award to
a proportion of Warren’s modest damages award. This was error. Thus, we reverse the
attorney fee award and the cost award, and we remand the matter to the trial court to
determine a reasonable attorney fee award and to increase the cost award by $5,882.
II. BACKGROUND
A. The Litigation Through the Jury Award2
In January 2011, Warren purchased a 2010 Kia Forte priced at $16,375, with
express warranties. Warren’s total purchase price for the vehicle was $24,737.45,
2 The record does not include a reporter’s transcript of the jury trial. Thus, we
describe the facts of the litigation as best we can discern them from the record on appeal.
(Duale v. Mercedes-Benz USA, LLC (2007) 148 Cal.App.4th 718, 722 (Duale).)
3
including taxes, fees, and all finance charges on a five-year loan. Within the first year of
its purchase and at 26,600 miles, Warren began having “problems” with the vehicle.
Through May 8, 2013, Warren took the vehicle to a Kia-authorized repair facility a total
of 14 times. On May 8, Warren traded in the vehicle and purchased a 2013 Kia Forte.
Sometime between May 8, 2013, and June 12, 2014, Warren learned that she
could request a “buyback” of her 2010 Kia Forte pursuant to the Song-Beverly Act. On
June 12, Warren called Kia’s call center, requested a buyback, and was told that her
request would be “escalated” or referred to the regional office for review. On June 17,
the regional call center called Warren and left a voice mail, telling Warren the case had
been “escalated” to their department, they wanted to discuss the case, and asking Warren
to return their call. At trial, Warren denied receiving any voice mail or follow-up contact
of any kind from the call center. In any event, Kia did not attempt to contact Warren
after June 17 and closed the case on July 2, 2014.
Warren later contacted O’Connor & Mikhov LLP (OM Law) concerning her
potential lemon law claim. OM Law agreed to take the case and “bear the risk associated
with litigating the case on a contingent-fee basis,” knowing it “faced a genuine risk of not
being paid for its services for years, if at all, while advancing thousands of dollars in
costs.” Before filing suit in October 2014, OM Law offered to settle the case, but Kia
rejected the offer.
In October 2014, OM Law filed Warren’s operative original complaint against
Kia, alleging Kia violated the Song-Beverly Act by failing to adequately service and
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repair “defects and nonconformities” in the 2010 Kia Forte, including “suspension,
electrical, interior, and brakes defects” and further alleging Kia failed to conform the
vehicle to its express warranties despite a reasonable number of repair attempts. The
complaint sought general, special, actual, incidental, and consequential damages
according to proof, a civil penalty of twice Warren’s actual damages, rescission of the
purchase contract, restitution of the amount paid, diminution in value of the vehicle,
prejudgment interest, attorney fees, and costs and expenses.
By May 2015, the parties had exchanged some written discovery, but Kia had not
offered to settle the case and the case appeared likely to go to trial. Thus, on May 6,
2015, OM Law associated The Altman Law Group (Altman Law) into the case as
cocounsel for Warren, with the understanding that Altman Law would serve as Warren’s
“lead” trial counsel and prepare the case for trial.
In October 2015, Kia offered to settle the case pursuant to what Warren claimed
and the trial court ruled was an uncertain and therefore unenforceable Code of Civil
Procedure section 998 offer. Kia offered to pay Warren total damages of $12,500—or an
unspecified, alternative sum if Warren itemized and proved her incidental and
consequential damages to Kia—plus $5,000 for Warren’s attorney fees, costs, and
expenses. Warren did not accept the offer and allowed it to lapse. The court later ruled
the offer was unenforceable because it did not state a “certain” alternative amount in the
event Warren did not accept the $12,500 sum. Thus, the court expressly did not disallow
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any of Warren’s postoffer costs or expenses based on the offer. (Code Civ. Proc., § 998,
subd. (e).)
At a mandatory settlement conference in January 2016, the parties did not settle
the case and it was ordered to trial. Despite Altman Law’s May 2015 association as lead
trial counsel, OM Law attended trial readiness conferences on January 11 and 12, and
February 25, 2016. In June 2016, OM Law associated a third law firm, Wirtz Law APC
(Wirtz Law) “to join the case as lead trial counsel and prepare the case for trial” “due to
Altman Law’s busy trial calendar involving other cases against Kia that caused
scheduling conflicts with Kia.” An attorney from Wirtz Law attended trial readiness
conferences on June 16, 20, and 23, and July 14, 18, and 21, 2016. Attorneys for Kia
appeared at each trial readiness conference and reported that Kia was not ready for trial
because its trial attorney, Brian Takahashi, was engaged in another trial.
Bryan C. Altman of Altman Law attended the first day of trial on June 29, 2016,
with two attorneys from Wirtz Law, Richard M. Wirtz and Amy R. Smith. Mr.
Takahashi appeared for Kia, and jury selection began. The parties were unable to
empanel a jury due to the upcoming July 4 holiday, however, so the court and counsel
agreed to continue trial to July 18. The court ordered all counsel to be present on July 18,
but Mr. Takahashi was engaged in another trial on July 18 and was later ordered to pay
Wirtz Law $2,861.24 in sanctions for his failure to appear on July 18.
Trial resumed on July 25 and was conducted over eight days on July 25 through
28 and August 1 through 4, 2016. Three attorneys represented Warren at trial: Mr. Wirtz
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and Ms. Smith from Wirtz Law, and Roger Kirnos, who “frequently associates or
specially appears for purposes of trial” for OM Law clients. Julian Senior represented
Kia at trial.
On August 4, 2016, the jury returned a special verdict and awarded Warren total
damages of $17,455.57.3 Although it found Kia willfully failed to repurchase or replace
the vehicle, the jury did not award Warren a civil penalty. (§ 1794, subd. (c).) Judgment
was entered on September 9, 2016. The judgment indicates that, absent the parties’
agreement, the court would determine the amounts of Warren’s attorney fees, costs, and
expenses pursuant to noticed motions, and amend the judgment to include these amounts.
B. Warren’s Requested Costs and Expenses
In October 2016, Warren filed a memorandum of costs or cost bill, seeking a total
of $40,151.11 in costs and expenses. Kia moved to tax costs, challenging several of the
items requested in the cost bill. The court struck two items from the cost bill: (1)
Warren’s prejudgment interest claim of $9,832.46 on the $17,455.57 award, and (2)
$5,882 for the costs of court reporter’s transcripts of the trial. Thus, Warren was awarded
$24,436.65 in total costs and expenses.
3 The jury found the 2010 Kia Forte had defects which substantially impaired its
use, value, or safety and which Kia failed to repair after a reasonable number of attempts
or opportunities; Kia failed to promptly replace or repurchase the vehicle; Warren paid
$18,378.26 for the vehicle (including finance charges, sales, tax, license fees, registration
fees, and other fees) and incurred incidental and consequential damages of $2,707.10.
The jury also found the cash value of the vehicle before it was submitted for repair was
$16,375 and that Warren put 26,600 miles on the vehicle. The jury calculated the value
of the vehicle’s use as $3,629.79, resulting in total damages of $17,455.57 ($18,378.26
plus $2,707.10 minus $3,629.79 equals $17,455.57).
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C. The Motion for Attorney Fees
In December 2016, Warren filed a motion for attorney fees, seeking $351,055.26
in lodestar fees (the number of attorney hours worked times the attorneys’ hourly rates),
plus a lodestar multiplier of 1.5, or an additional $175,527.63, for total requested fees of
$526,582.89. The $351,055.26 lodestar figure is comprised of $111,480 for OM Law,
$56,576.50 for Altman Law, and $182,998.76 for Wirtz Law. In her motion, Warren
argued that the nature and complexity of her case, the skills of her attorneys, and her
contingency fee arrangements with her attorneys warranted all of the requested fees.
Warren also argued that Kia had engaged in “aggressive” and “scorched earth” litigation
tactics, necessitating many of the requested lodestar fees.
An attorney from each of Warren’s three law firms submitted supporting
declarations: Steve Mikhov of OM law, Mr. Altman of Altman Law, and Mr. Wirtz of
Wirtz Law. Each declaration included billing statements describing each attorney task
performed, the date the task was performed, the time spent on the task,4 the attorney who
performed the task, the attorney’s hourly rate, the amount charged for the task, along with
the total hours worked by each attorney and the total amounts charged for each attorney.
OM Law charged for 348.4 hours at hourly rates of $225 to $500, resulting in total
fees of $111,480. Eleven attorneys, including Messrs. Mikhov and Kirnos, worked on
the case for OM Law. Mr. Mikhov claimed the hourly rates charged were reasonable
4Wirtz Law and Altman Law charged for time in one-tenth hour increments; OM
Law charged in one-quarter hour increments.
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because they were consistent with the rates charged by other attorneys who litigate
consumer matters, and he submitted evidence that OM Law had been awarded fees in
other cases based on similar rates. Mr. Mikhov also argued that lemon law cases are not
“simple actions”; rather, they require “a specialized understanding of the full scope of
consumer protection laws,” the “intricacies of automobiles and a lexicon associated with
them,” and knowledge of “manufacturers’ and dealers’ protocols for repairing vehicles.”
Mr. Mikhov also pointed out that OM Law’s billing reflected a substantial amount of
uncharged time.
Altman Law charged for 136.17 total hours at hourly rates of $650 for Mr. Altman
and $450 for two associates, resulting in its total bill of $56,576.50. Mr. Altman
acknowledged that some of the work he and his associates performed “was duplicative or
ultimately unnecessary insofar as [he] was not trial counsel at the trial”; thus, he deducted
$30,598.50 from his invoice which represented “significant work performed in
preparation for trial” that was not being charged.
Wirtz Law charged for 508.40 total hours, including 188 hours for Mr. Wirtz at an
average hourly rate of $451.50, and 247.4 hours for Ms. Smith at an average hourly rate
of $333.23. These hourly rates charged are lower than Mr. Wirtz’s usual hourly rates of
$500 and Ms. Smith’s usual hourly rate of $400, when these attorneys’ uncharged time
was taken into account. Two other attorneys at Wirtz Law charged for a total of 73 hours
at average hourly rates of $247.13 and $300, also lower than these attorneys’ usual hourly
9
rates of $300 and $400 due to uncharged time. A paralegal worked 7.50 hours at no
charge and a legal support person worked 4.30 hours for a total charge of $400.
Wirtz Law’s total bill of $182,998.76 included a deduction of $2,861.24 for the
sanctions Kia paid to Wirtz Law; otherwise the bill would have been $185,860. As
indicated, Wirtz Law served as lead trial counsel and was brought into the case shortly
before trial. Its work mainly consisted of attending six trial setting conferences,
reviewing pleadings and documents, communicating with attorneys at OM Law,
preparing the case for trial, and attending and conducting the trial. Mr. Wirtz presented a
United States Consumer Law Attorney Fee Survey Report indicating that the hourly rates
charged by Wirtz Law were commensurate with the rates charged by California attorneys
who practice consumer law.
In opposing the motion, Kia claimed the hours and rates charged by Warren’s
three law firms were excessive, given that this was a “simple lemon law case,” and 16
attorneys from three different law firms had worked on the case. Kia argued this was a
“classic case of excessive billing due to staffing a case with too many attorneys resulting
in duplicative, inefficient work.” Kia asked the court to limit the attorney fee award to
$180,000 for all three firms.
D. The Trial Court’s Rulings on the Attorney Fee and Cost Motions
A combined hearing on the attorney fee motion and the motion to tax costs was
held on March 20, 2017. Following the hearing, the court took the matter under
submission and ultimately awarded Warren $115,848.24 in attorney fees and $24,436.65
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in costs. The trial judge who ruled on the motions (Judge Pacheco) was the same judge
who had presided at trial.
At the hearing, Warren’s counsel, Mr, Kirnos, pointed out that trial courts in three
other recent cases had awarded similar amounts of attorney fees against Kia, namely,
$270,000, $280,000, and a “conditional ruling” awarding $350,000. Mr. Kirnos also
pointed out that, in Goglin, supra, 4 Cal.App.4th at pages 473 and 474, the trial court
awarded $180,000 in attorney fees, and the Goglin court upheld the trial court’s approval
of a $575 hourly attorney fee rate as appropriate.
Mr. Kirnos stressed that “drastic” reductions had been made to the attorneys’
billings in order to eliminate duplicative work and account for “the musical chairs” that
were played to get the case to trial. He also cited several examples of Kia’s “scorch” and
“burn” litigation tactics which caused Warren to incur substantial fees, including a
motion for summary judgment and a requested spoliation instruction, both of which Mr.
Kirnos argued were “dead on arrival.” Mr. Kirnos said he had never been involved in a
case that had been as “heavily litigated” as this one, and he argued this was not “an easy
case to try.” The court noted there was “a disconnect” between the verdict amount of
“$17,000” and the over $500,000 in requested attorney fees, and said it believed its
tentative award of $115,848.24 in attorney fees was “generous.” The court said: “Well, I
guess in the back of my head I’m thinking, okay. The verdict is $17,000. The attorney
fee request[] is $500,000. So somehow there’s a disconnect, in the back of my head, that
a 17,000-dollar case results in a 500,000-dollar request in attorney fees. . . . That seems
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like an exorbitant amount of money. . . . [¶] . . . [¶] . . . I thought I was generous at
[$]115[,000].”
In response, Mr. Kirnos told the court, “proportionality is inappropriate”—that is,
it is error to tie an attorney fee award to the verdict. The court responded, “I’m not
saying that [proportionality is] the basis of my ruling,” but the disconnect between the
verdict and the fee request does not “rub right” with the court. The court acknowledged
there were “a lot of witnesses and a lot of testimony” at trial, and all three firms “did a lot
of work,” but stressed it was “three firms that did a lot of work, three firms.” (Italics
added.) The court asked Mr. Kirnos whether $350,000 in attorney fees would have been
incurred by a single law firm, and Mr. Kirnos explained that two firms are usually
involved in a consumer warranty case that goes to trial—the firm that initially takes the
case, “works on settlements, deals with motions to compel,” and takes “some of the
depositions.” Then a second firm “get[s] in at the end” and tries the case with a “very
senior trial attorney” like Messrs. Wirtz or Altman.
In ruling on the motion, the court wrote: “The three firms billed a total of
$351,055.26. This is an excessive amount for a non-complex case. The court will
exercise its discretion and reduce this amount to 33%, or $115,848.24, of the original
requested amount. This amount, while still much more than the $17,455.57 award, more
accurately reflects the reasonable amount of attorneys fees in a case which was not
particularly complex and which was handled by counsel experienced in this area of law.
Plaintiff has not demonstrated that this many attorneys, at these high rates, were
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necessary or reasonable to justify her requested billed amount. Additionally, despite
counsel[’]s argument that they carefully avoided duplication between the 3 firms, the
court is not convinced that the repetitiveness of these types of cases would necessarily
require the amount of time requested.” (Italics added.)
Next, the court addressed the requested lodestar multiplier of 1.5. The court
acknowledged that case law required the court to first “determine a touchstone or lodestar
figure based on a careful compilation of the actual time spent and reasonable hourly
compensation for each attorney,” and that the lodestar figure “may then be augmented or
diminished by taking various relevant factors into account, including (1) the novelty and
difficult[y] of the questions involved and the skill displayed in presenting them; (2) the
extent to which the nature of the litigation precluded other employment by the attorneys;
and (3) the contingent nature of the fee award, based on the uncertainty of prevailing on
the merits and of establishing eligibility for the award.”
The court explained: “[T]he initial [lodestar] amount is based on the reasonable
rate for noncontingent litigation of the same type, which amount may then be enhanced
(e.g.[,] through the use of a so-called multiplier to account for factors such as the
contingent nature of the case[).] The purpose of such adjustment is to fix a fee at the fair
market value for the particular action. In effect, the court determines, retrospectively,
whether the litigation involved a contingent risk or required extraordinary legal skill
justifying augmentation of the unadorned lodestar in order to approximate the fair market
rate for such services.” The court concluded, “despite [Warren’s] arguments with respect
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to the contingency risk and difficulty of lemon law cases, the fact remains that this was a
relatively straightforward case handled by not one, not two[,] but three law firms who
claim a specialty in these matters. They were certainly not precluded from taking other
work. Given these facts the court finds that no [positive] multiplier shall be applied.”
III. DISCUSSION
A. The Court Abused Its Discretion in Applying a 33% Negative Multiplier to Warren’s
Lodestar Attorney Fees of $351,055.26
1. Applicable Legal Principles, Overview
The Song-Beverly Act is “‘manifestly a remedial measure, intended for the
protection of the consumer.’” (Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th
985, 990.) To this end, section 1794, subdivision (d) provides that a prevailing buyer in
an action arising under the Song-Beverly Act “shall be allowed by the court to recover as
part of the judgment a sum equal to the aggregate amount of costs and expenses,
including attorney’s fees based on actual time expended, determined by the court to have
been reasonably incurred by the buyer in connection with the commencement and
prosecution of such action.” (Italics added.) In enacting this provision, the “Legislature
has provided injured consumers strong encouragement to seek legal redress in a situation
in which a lawsuit might not otherwise have been economically feasible.” (Murillo v.
Fleetwood Enterprises, Inc., supra, at p. 994, italics added.)
The “plain wording” of section 1794, subdivision (d) requires the trial court to
“base” the prevailing buyer’s attorney fee award “upon actual time expended on the case,
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as long as such fees are reasonably incurred—both from the standpoint of time spent and
the amount charged.” (Robertson v. Fleetwood Travel Trailers of California, Inc. (2006)
144 Cal.App.4th 785, 817.) Likewise, when the prevailing buyer has a contingency fee
arrangement, he or she is entitled to recover “reasonable attorney fees for time reasonably
expended.” (See Nightingale v. Hyundai Motor America (1994) 31 Cal.App.4th 99, 105,
fn. 6.) This is consistent with California’s approach to determining a reasonable attorney
fee in various statutory and contractual contexts, which approach “ordinarily begins with
the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the
reasonable hourly rate.” (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095,
italics added.)
The lodestar figure may then be adjusted based on factors specific to the case, in
order to fix the fee at the fair market value of the legal services provided. (Ketchum v.
Moses (2001) 24 Cal.4th 1122, 1132 [“The lodestar is the basic fee for comparable legal
services in the community.”]; Serrano v. Priest (1977) 20 Cal.3d 25, 49.) These case-
specific, lodestar adjustment factors may include, without limitation: “(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. [Citation.]” (Ketchum v. Moses, supra, at p.
1132.) The “procedural demands” of the case may also be considered. (Nightingale v.
Hyundai Motor America, supra, 31 Cal.App.4th at p. 104.) The lodestar adjustment
method “anchors the trial court’s analysis to an objective determination of the value of
15
the attorney’s services,” and thus ensures that the amount awarded is not arbitrary.
(PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1095.) A prevailing buyer in an
action arising under the Song-Beverly Act has the burden of establishing that his or her
requested attorney fees were “‘allowable,’” “‘reasonable in amount,’” and “‘reasonably
necessary to the conduct of the litigation.’” (Goglin, supra, 4 Cal.App.5th at p. 470.)
We review the trial court’s attorney fee award under the Song-Beverly Act for an
abuse of discretion, and in doing so we are guided by settled principles. (Goglin, supra, 4
Cal.App.5th at p. 470.) “‘We presume the trial court’s attorney fees award is correct, and
“[w]hen the trial court substantially reduces a fee or cost request, we infer the court has
determined the request was inflated.” [Citation.] “The ‘“experienced trial judge is the
best judge of the value of professional services rendered in his [or her] court, and while
his [or her] judgment is of course subject to review, it will not be disturbed unless the
appellate court is convinced that it is clearly wrong.”’”’ [Citation.]” (Ibid.)
2. Analysis
Warren claims the court abused its discretion in applying a negative 33%
multiplier to her lodestar figure of $351,055.26, resulting in a fee award of $115,848.24,
or one-third of the lodestar fees billed by Warren’s three law firms. She argues that
when, as here, an across-the-board percentage cut is applied to a “‘voluminous fee
application,’” the cut is “‘subject to heightened scrutiny’” on appeal. (Kerkeles v. City of
San Jose (2015) 243 Cal.App.4th 88, 102 (Kerkeles).)
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Additionally, Warren claims that a court abuses its discretion when it ties an
attorney fee award to a proportion of the prevailing buyer’s damages award in an action
arising under the Song-Beverly Act. She claims a rule of proportionality is inconsistent
with the legislative policy, expressed in section 1794, subdivision (d), of allowing a
prevailing buyer to recover a reasonable attorney fee, and that such a rule of
proportionality should be prohibited because it will “make it difficult, if not impossible”
for individuals with meritorious lemon law claims to obtain redress from the courts.
(Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 164 (Graciano).)
We agree that these claims have merit. As we explain, it is inappropriate and an
abuse of a trial court’s discretion to tie an attorney fee award to the amount of the
prevailing buyer/plaintiff’s damages or recovery in a Song-Beverly Act action, or
pursuant to another consumer protection statute with a mandatory fee-shifting provision.
(See Graciano, supra, 144 Cal.App.4th at p. 164.) Thus, when a trial court applies a
substantial negative multiplier to a presumptively accurate lodestar attorney fee amount,
the court must clearly explain its case-specific reasons for the percentage reduction.
(Kerkeles, supra, 243 Cal.App.4th at pp. 102-104.) If, as occurred here, the reasons for
the reduction include tying the fee award to some proportion of the buyer’s damages
recovery, the court abuses its discretion.
Graciano is instructive on the application of a proportionality rule, or the practice
of tying an attorney fee award to the plaintiff’s damages or settlement recovery. The
plaintiff, Graciano, was awarded substantially reduced attorney fees, not under the Song-
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Beverly Act, but under two other consumer protection statutes with mandatory fee
shifting clauses—the Automobile Sales Finance Act (ASFA, § 2981 et seq.) and the
Consumers Legal Remedies Act (CLRA, § 1750 et seq.) (Graciano, supra, 144
Cal.App.4th at p. 145.) Graciano appealed, claiming among other things that the trial
court erroneously “capped” her attorney fee award to a percentage of her settlement
recovery, and the Graciano court agreed. (Id. at pp. 145, 161-164.)
A jury had awarded Graciano $11,191.40 for the defendant’s ASFA and CLRA
violations, and, for purposes of punitive damages, found the defendant violated the
CLRA by engaging in conduct with malice, oppression, and fraud. (Graciano, supra,
144 Cal.App.4th at p. 147.) Before the jury began deliberating Graciano’s punitive
damages claim, the parties settled the case for a $45,000 payment to Graciano in
exchange for her dismissal of all her claims with prejudice. (Ibid.) Graciano then sought
$249,365.36 in attorney fees and costs under the CLRA and AFSA. (Ibid.) She claimed
lodestar fees of $109,468.50, times a multiplier of 2.0 due to the contingent nature of her
attorneys’ representation, the delay in paying her attorneys, the results achieved, and the
complexity of the issues. (Ibid.)
The trial court awarded Graciano only $27,570 in attorney fees, even though she
had prevailed on her ASFA and CLRA claims. (Graciano, supra, 144 Cal.App.4th at p.
147.) In calculating the $27,570 fee, the trial court reduced the hourly rates of Graciano’s
three attorneys to a blended rate of $250, less than their requested hourly rates of $350,
$275, and $270, then applied the $250 rate to the total hours expended of 367.6, resulting
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in a revised lodestar figure of $91,900. (Id. at p. 148.) Next, the trial court applied a
negative multiplier of .30, resulting in the $27,570 fee award ($91,900 times .30 equals
$27,570). (Id. at p. 162.) The trial court noted that the settlement was for $45,000 plus
any attorney fees the court might award, and contingency fee agreements commonly
required the plaintiff to pay approximately 40 percent of the recovery. (Ibid.) Thus, if
$45,000 represented Graciano’s 60 percent portion of the total settlement, then 40 percent
of the settlement would be $30,000 ($75,000 times .40 equals $30,000; $75,000 times .60
equals $45,000). The application of the .30 negative multiplier to the adjusted lodestar
figure of $91,900 resulted in the fee award of $27,570, which the trial court found was
“within the market place range of fees.” (Ibid.)
The Graciano court found two problems with the trial court’s fee analysis which
are potentially relevant here on remand. First, the trial court’s reduction of the attorneys’
requested hourly rates to $250 was an abuse of the trial court’s discretion. (Graciano,
supra, 144 Cal.App.4th at pp. 154.) Graciano’s attorneys had adduced unchallenged
evidence that their requested hourly rates were “well within the range charged” by
attorneys engaged in similar practice areas and were appropriate and reasonable in the
relevant geographical area. (Id. at p. 155.) The defendant did not dispute this evidence,
but argued the court should base the hourly rates on Imperial County standards. (Ibid.)
The trial court limited the hourly rates to $250 because this was the hourly rate set or
allowed for expert testimony in Imperial County, pursuant to local rule 3.12. (Id. at pp.
155-156.) This was an abuse of discretion, both because the trial court did not
19
objectively determine “the prevailing rate in the community for comparable professional
legal services” (id. at p. 156; PLCM Group v. Drexler, supra, 22 Cal.4th at p. 1096
[reasonable hourly rate is that prevailing in community for similar work]) and because
“Graciano’s unrebutted declarations established the prevailing rates in the region for
attorneys with comparable skills and expertise, and her evidence compelled a finding that
the requested hourly rates were within the reasonable rates for purposes of setting the
base lodestar amount.” (Graciano, supra, at p. 156, italics added.)
Second, the Graciano court faulted the trial court’s application of the .30 negative
multiplier to the adjusted lodestar fees of $91,900, because the trial court’s goal was to
arrive at a reasonable contingency fee of approximately 40 percent of Graciano’s
settlement recovery of $45,000 plus attorney fees. (Graciano, supra, 144 Cal.App.4th at
pp. 148, 161-164.) The court explained that, “because this matter involve[d] an
individual plaintiff suing under consumer protection statutes involving mandatory fee-
shifting provisions, the legislative policies are in favor of Graciano’s recovery of all
attorney fees reasonably expended, without limiting the fees to a proportion of her actual
recovery.” (Id. at p. 164, italics added.) The court drew a direct analogy to attorney fee
applications in civil rights cases: “The circumstances here are analogous to those
addressed by the United States Supreme Court in the civil rights context: ‘A rule that
limits attorney’s fees in civil rights cases to a proportion of the damages awarded would
seriously undermine Congress’ purpose in enacting [42 United States Code section] 1988.
Congress enacted [42 United States Code section] 1988 specifically because it found that
20
the private market for legal services failed to provide many victims of civil rights
violations with effective access to the judicial process. [Citation.] These victims
ordinarily cannot afford to purchase legal services at the rates charged by the private
market. . . . Moreover, the contingent fee arrangements that make legal services available
to many victims of personal injuries would often not encourage lawyers to accept civil
rights cases, which frequently involve substantial expenditures of time and effort but
produce only small monetary recoveries.’ [Citation.] ‘A rule of proportionality would
make it difficult, if not impossible, for individuals with meritorious civil rights claims but
relatively small potential damages to obtain redress from the courts.’ [Citation.]” (Ibid.)
Graciano’s reasoning applies with equal force here, a case involving a prevailing
buyer seeking attorney fees under the Song-Beverly Act, another consumer protection
statute which, like the CRLA and the ASFA, includes a mandatory fee-shifting provision.
(§ 1794, subd. (d).) Here, unlike the trial court in Graciano, the trial court did not reduce
the requested hourly rates of Warren’s attorneys and did not attempt to calculate a
contingency fee award based on Warren’s $17,455.57 damages award. But the trial
court’s comments at the hearing and in its written ruling on the attorney fee motion
indicate that the court applied a 33% negative multiplier to Warren’s requested lodestar
fees of $351,055.26, with at least the partial goal of arriving at an attorney fee award that
was roughly proportional to or more in line with Warren’s modest $17,455.57 damages
award. This part of the court’s analysis was “‘clearly wrong’” and an abuse of the court’s
discretion. (Goglin, supra, 4 Cal.App.5th at p. 470.)
21
That said, the court’s other reasons for selecting the negative 33% multiplier were
appropriate. (Ketchum v. Moses, supra, 24 Cal.4th at p. 1132 [court may consider
various case-specific factors in adjusting lodestar figure to arrive at reasonable fee].) As
indicated, in its ruling on the attorney fee motion the court observed: “The three firms
billed a total of $351,055.26. This is an excessive amount for a non-complex case. The
court will exercise its discretion and reduce this amount to 33%, or $115,848.24, of the
original requested amount. This amount, while still much more than the $17,455.57
award, more accurately reflects the reasonable amount of attorneys fees in a case which
was not particularly complex and which was handled by counsel experienced in this area
of law. Plaintiff has not demonstrated that this many attorneys, at these high rates, were
necessary or reasonable to justify her requested billed amount. Additionally, despite
counsel[’]s argument that they carefully avoided duplication between the 3 firms, the
court is not convinced that the repetitiveness of these types of cases would necessarily
require the amount of time requested.” (Italics added.)
The court properly declined to reduce the requested hourly rates of Warren’s
attorneys and properly anchored its attorney fee award to Warren’s requested lodestar
fees of $351,055.26. Warren adduced unrebutted evidence that her attorneys’ requested
hourly rates were within the range of the hourly rates charged by other plaintiffs’
attorneys practicing consumer law. (Graciano, supra, 144 Cal.App.4th at p. 156
[reasonable hourly rate is that prevailing in community for similar work]; Horsford v.
Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396
22
[verified attorney time records are presumptively correct].) Kia did not rebut Warren’s
evidence that her attorneys’ hourly rates were reasonable. Rather, Kia claimed the hourly
rates of Warren’s plaintiff’s attorneys should be limited to the lower hourly rates charged
by Kia’s defense attorneys. This was not a good comparison, given that Warren’s
plaintiff’s attorneys’ work pursuant to contingency arrangements and Kia’s defense
attorneys do not. Kia also generally criticized each time entry of Warren’s attorneys as
excessive and also generally criticized the overall time Warren’s attorneys spent on the
case as excessive. But the aggregate hours expended by Warren’s attorneys may
appropriately be adjusted by applying a negative multiplier to the lodestar figure.
(Graciano, supra, at pp 159-161 [negative multipliers are appropriate in cases involving
mandatory fee-shifting statutes].)
The problem with the trial court’s analysis is that we are unable to distinguish the
extent to which the court’s choice of the 33% negative multiplier was based on the
court’s expressed and erroneous goal of arriving at a fee award that was roughly
proportional to Warren’s modest $17,455.57 damages award. The court erred to the
extent it selected the negative multiplier to make the fee award roughly proportionate to
Warren’s modest damages award. But the court was within its discretion to the extent it
selected the multiplier to arrive at a reasonable fee based on the factors specific to the
case, including the excessive time spent on the “not so complex case” by Warren’s
attorneys in the aggregate.
23
It is clear that Warren’s excessive lodestar fee occurred principally because her
original attorneys, OM Law, were unable or unwilling to try the case. As a result, OM
Law had to bring in not one, but two other law firms, namely, Altman Law after it
became clear the case had to be tried, and Wirtz Law after Mr. Altman was unavailable
after the trial was continued. Warren also had three attorneys representing her at the
eight-day trial. As the court found, this was excessive and resulted in duplicative charges
beyond the uncharged time reflected in counsel’s billing statements. That said, the delay
in the trial and the need to bring in Wirtz Law, and Mr. Wirtz as Warren’s lead trial
counsel, was due to Kia, whose initial trial attorney, Mr. Takahashi, was sanctioned for
not being available when the trial was to resume. Warren also adduced unrebutted
evidence that Kia engaged in “scorched earth” litigation tactics that were responsible for
many of the hours Warren’s attorneys expended before trial. On remand, the court
should consider all of these and other relevant circumstances in selecting an appropriate
multiplier in order to determine a reasonable fee award for Warren. (Nightingale v.
Hyundai Motor America, supra, 31 Cal.App.4th at p. 104 [complexity of case and its
procedural demands are relevant in selecting lodestar multiplier].)
We have effectively applied “heightened scrutiny” to the court’s selection of the
33% negative multiplier to Warren’s lodestar figure. This was appropriate. In consumer
law cases, as in civil rights cases, when a “‘voluminous fee application’” is made, as it
was here, the court may, as it did here, “‘make across-the-board percentage cuts either in
the number of hours claimed or in the final lodestar figure.’” (Kerkeles, supra, 243
24
Cal.App.4th at p. 102; Gates v. Deukmejian (9th Cir. 1992) 987 F.3d 1392, 1399.) But
the court must clearly explain its reasons for choosing the particular negative multiplier
that it chose; otherwise, the reviewing court is unable to determine that the court had
valid, specific reasons for its across-the-board percentage reduction. (Kerkeles, supra, at
pp. 102-104 [“‘We can’t defer to reasoning that we can’t review . . . .’”].) Here, the trial
court clearly explained its reasons for selecting the 33% negative lodestar multiplier. But
that explanation shows the court chose the multiplier, in part, to arrive at a fee award that
was roughly proportionate to Warren’s $17,455.57 damages award. As discussed, this
was error and must not be repeated on remand. (See Mountjoy v. Bank of America, N.A.
(2016) 245 Cal.App.4th 266, 280-281 [70 percent negative lodestar multiplier
erroneously applied based on evidence that 70 percent of counsel’s time entries were
“flawed”].)
B. Warren’s Trial Transcripts Expense of $5,882 Was Erroneously Excluded From Her
Cost and Expense Award, but Her Prejudgment Interest Claim Was Properly Denied
Warren sought to recover $40,151,11 in costs and expenses from Kia. (§ 1794,
subd. (d).) The court granted Kia’s motion to tax costs in part by striking two items of
requested costs and expenses: (1) $5,882 for the cost of court reporter trial transcripts;
and (2) $9,832.46 for prejudgment interest on the $17,455.57 jury award from the date
Warren purchased the vehicle in January 2011. These deductions resulted in a total cost
and expense award of $24,436.65.
25
Warren claims the court erroneously disallowed both items. We agree that the
$5,882 claim for trial transcripts was erroneously disallowed. (§ 1794, subd. (d).) But
we disagree that Warren was entitled to prejudgment interest on any part of her
$17,455.47 jury award. As the trial court found, Warren’s damages of $17,455.47 were
neither certain nor capable of being made certain when she purchased the vehicle or at
any other point prior to trial. (§ 3287, subd. (a).) For the same reasons, the court did not
abuse its discretion in refusing to award Warren prejudgment interest on the award from
the date she filed her complaint. (Id., subd. (b).)
1. The $5,882 Trial Transcripts Expense Should Have Been Allowed
In disallowing Warren’s $5,882 claim for trial transcripts, the court reasoned that,
under Code of Civil Procedure section 1033.5, certain cost items, including the cost of
“[t]ranscripts of court proceedings not ordered by the court” “are not allowable as costs”
under Code of Civil Procedure section 10325 unless the item is “expressly authorized by
law.” (Code Civ. Proc., § 1033.5, subd. (b)(5).) The court noted that Civil Code section
1794, subdivision (d) does not “expressly authorize” reimbursement for trial transcripts
which are not court-ordered, even though the statute “refers generally to reimbursement
of costs and expenses.” This was error.
As explained in Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th
112, in enacting Civil Code section 1794, subdivision (d) the Legislature intended the
5 Code of Civil Procedure section 1032, subdivision (b) provides: “Except as
otherwise expressly provided by statute, a prevailing party is entitled as a matter of right
to recover costs in any action or proceeding.”
26
phrase “costs and expenses” to cover items not included in “the detailed statutory
definition of ‘costs’” set forth in Code of Civil Procedure section 1033.5. (Jensen v.
BMW of North America, Inc., supra, at pp. 137-138.) Civil Code section 1794,
subdivision (d) provides, in relevant part: “If the buyer prevails in an action under this
section, the buyer shall be allowed by the court to recover as part of the judgment a sum
equal to the aggregate amount of costs and expenses . . . determined by the court to have
been reasonably incurred by the buyer in connection with the commencement and
prosecution of such action.” (Italics added.)
Additionally, it is indisputable that Warren “reasonably incurred” the $5,882 cost
of the trial transcripts “in connection with the . . . prosecution of [the] action.” (§ 1794,
subd. (d).) This was an eight-day jury trial. As a practical matter, Warren would have
been unable to defend the jury award without the trial transcripts. At the very least,
Warren would have incurred additional expenses and great difficulty in defending the
award without the trial transcripts, in the event Kia challenged the jury award in posttrial
proceedings or on appeal. For these reasons, the $5,882 item for trial transcripts was
erroneously excluded from Warren’s cost and expense award.
2. Warren’s Prejudgment Interest Claim Was Properly Denied
Warren sought prejudgment interest of $9,832.46 on her $17,455.57 jury award,
calculated at the legal rate of 10 percent per annum, from January 11, 2011, the date she
purchased her vehicle, through September 9, 2016, the date judgment was entered.
(§ 3287 subd. (a).) Alternatively, she sought prejudgment interest of $3,384.24,
27
calculated at 10 percent per annum from October 1, 2014, the date she filed her
complaint, to the date judgment was entered.
(a) Section 3287, Subdivision (a)
Section 3287, subdivision (a) allows a person to recover prejudgment interest on
“damages certain, or capable of being made certain by calculation” from the day such
damages are certain or capable of being made certain.6 “[T]he court has no discretion,
but must award prejudgment interest upon request, from the first day there exists both a
breach and a liquidated claim.” (North Oakland Medical Clinic v. Rogers (1998) 65
Cal.App.4th 824, 828.) Prejudgment is an element of damages, not a cost. (Id. at p. 830.)
The Song-Beverly Act does not preclude an award of prejudgment interest under section
3287, subdivision (a). (Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 1004,
1010.)
Warren claims the entire $17,455.57 amount of her jury award was certain or
capable of being made certain “by looking at the sale contract.” We disagree.
In denying Warren’s prejudgment interest claim, the trial court relied on Duale, supra,
148 Cal.App.4th 718. We agree that Duale is on point and persuasive. The Duale court
concluded that the lower court had properly disallowed prejudgment interest on the
plaintiff’s jury award under the Song-Beverly Act because the amount of the award was
6Section 3287, subdivision (a) provides, in relevant part: “A person who is
entitled to recover damages certain, or capable of being made certain by calculation, and
the right to recover which is vested in the person upon a particular day, is entitled also to
recover interest thereon from that day . . . .”
28
dependent upon the jury’s resolution of several disputed warranty-related issues, and
thus, the amount of the award could not have been determined before trial. (Duale,
supra, at p. 729.) The parties in Duale disputed, and the jury in Duale had to determine
“(1) whether any of the many defects alleged in the complaint represented a
nonconformity, (2) whether any such nonconformity ‘substantially impaired [the] use,
value, or safety’ of the vehicle,” and (3) for any such nonconformity, the mileage at
which the plaintiffs first presented the car to the defendant for repair. (Ibid.; see
§§ 1793.2, subd. (d)(2)(C), 1794, subd. (b).) Thus, the Duale plaintiffs’ breach-of-
warranty damages could not have been determined before trial, and an award of
prejudgment interest was therefore inappropriate. (Duale, supra, at p. 729.)
As the Duale court explained: “‘“Damages are deemed certain or capable of being
made certain within the provisions of subdivision (a) of section 3287 where there is
essentially no dispute between the parties concerning the basis of computation of
damages if any are recoverable but where their dispute centers on the issue of liability
giving rise to damage.” [Citations.]’ [Citation.] Thus, ‘“‘[t]he test for recovery of
prejudgment interest under [Civil Code] section 3287, subdivision (a) is whether
defendant actually know[s] the amount owed or from reasonably available information
could the defendant have computed that amount. [Citation.]’ [Citations.] ‘The statute
. . . does not authorize prejudgment interest where the amount of damage, as opposed to
the determination of liability, “depends upon a judicial determination based upon
conflicting evidence and it is not ascertainable from truthful data supplied by the claimant
29
to his debtor.” [Citations.]’ [Citation.] Thus, where the amount of damages cannot be
resolved except by verdict or judgment, prejudgment interest is not appropriate.
[Citation.]” [Citation.]’ [Citations.]” (Duale, supra, 148 Cal.App.4th at p. 729.)
The trial court here disallowed Warren’s prejudgment interest claim for the same
reasons cited in Duale. In denying Warren’s prejudgment interest claim, the court found
the jury had to determine “(1) whether any of the many defects alleged in the complaint
represented a nonconformity, (2) whether any such nonconformity substantially impaired
[the] use, value, or safety of the vehicle, and (3) then to determine—for any such
nonconformity—the mileage at which [Warren] first presented the car to [Kia] for
repair.” (See Duale, supra, 148 Cal.App.4th at p. 729.) Warren has not shown that these
warranty-related issues were not disputed at trial. Indeed, the record does not include any
trial transcripts, even though Warren’s counsel spent $5,882 to obtain trial transcripts. In
addition, the jury’s special verdict supports the trial court’s finding that these warranty-
related issues were disputed at trial, and therefore, that Warren’s breach-of-warranty
damages could not have been determined at any point before trial, including “by looking
at the sale contract.”7
7 In its special verdict, the jury found: (1) Warren’s vehicle had (unspecified)
defects which substantially impaired its use, value, or safety, and which Kia failed to
repair after a reasonable number of attempts or opportunities; (2) Kia failed to promptly
replace or repurchase the vehicle; (3) Warren paid $18,378.26 for the vehicle through the
time of trial (including finance charges, sales tax, license fees, registration fees, and other
fees); and (4) Warren incurred incidental and consequential damages of $2,707.10. The
jury also found the cash value of the vehicle before it was submitted to Kia for repair was
$16,375, and Warren put 26,600 miles on the vehicle. The jury thus calculated the value
[footnote continued on next page]
30
Even if Warren’s breach-of-warranty damages were certain or capable of being
made certain either from the sales contract or other information available to Kia before
trial, Warren has not shown that her incidental and consequential damages of
$2,707.10—a key component of her $17,455.57 jury award8—were certain or capable of
being made certain before trial—based on any information available to Kia. As
indicated, prejudgment interest is not authorized under section 3287, subdivision (a)
where the amount of the damages is either disputed or cannot be determined from
information available to the debtor. (Duale, supra, 148 Cal.App.4th at p. 729.)
Warren necessarily incurred her incidental and consequential damages for Kia’s
breach of the vehicle’s express or implied warranties after she purchased the vehicle.
Thus, those damages could not be ascertained “by looking at the sale contract.” In
addition, Kia’s Code of Civil Procedure section 998 offer (which the trial court later
found was uncertain and invalid) indicated Kia was unaware of the amount of Warren’s
incidental and consequential damages when Kia made the offer in October 2015. Warren
has pointed to no evidence that Kia was informed of the amount of her incidental and
consequential damages before trial, or that Kia possessed any information upon which it
could have calculated those damages before trial. (Cf. Leaf v. Phil Rauch, Inc. (1975) 47
[footnote continued from previous page]
[footnote continued from previous page]
of the vehicle’s use as $3,629.79, resulting in total damages of $17,455.57 ($18,378.26
plus $2,707.10 minus $3,629.79 equals $17,455.57).
8 See footnote 7, ante.
31
Cal.App.3d 371, 375-377 [plaintiffs entitled to prejudgment interest under Civ. Code,
§ 3287, subd. (a), where all of their damages for breach of a vehicle sales contract,
including their breach of warranty and their incidental and consequential damages, were
ascertainable at or after they rescinded the sales contract].) Thus, the trial court properly
denied Warren’s prejudgment interest claim under Civil Code section 3287, subdivision
(a).
(b) Section 3287, Subdivision (b)
Warren also claims the court abused its discretion in refusing to award her
prejudgment interest under section 3287, subdivision (b), which provides: “Every person
who is entitled under any judgment to receive damages based upon a cause of action in
contract where the claim was unliquidated, may also recover interest thereon from a date
prior to the entry of judgment as the court may, in its discretion, fix, but in no event
earlier than the date the action was filed.” “The trial judge, not the jury, determines a
prejudgment interest award on unliquidated damages.” (North Oakland Medical Clinic v.
Rogers, supra, 65 Cal.App.4th at p. 829.)
At the hearing on Kia’s motion to tax costs and Warren’s motion for attorney fees,
Warren’s counsel asked the court to exercise its discretion and award Warren
prejudgment interest under section 3287, subdivision (b). Although the trial court did not
address subdivision (b) of section 3287 in denying Warren’s prejudgment interest claim,
Warren offers no reason why the court abused its discretion in refusing to award her
prejudgment interest, on any part of her $17,455.47 jury award, at any time on or after
32
October 1, 2014, the date Warren filed her complaint. Thus, no abuse of discretion has
been shown.
IV. DISPOSITION
The orders awarding attorney fees, costs, and expenses are reversed, and the
matter is remanded to the trial court with directions to (1) increase Warren’s cost and
expenses award by the $5,882 expense incurred for trial transcripts, and (2) determine a
reasonable attorney fee award consistent with the views expressed in this opinion.
Warren shall recover her costs and attorney fees on appeal. (Graciano, supra, 144
Cal.App.4th at p. 165 [“‘Statutory authorization for the recovery of attorney fees incurred
at trial necessarily includes attorney fees incurred on appeal unless the statute specially
provides otherwise’”]; Cal. Rules of Court, rule 8.278.)
CERTIFIED FOR PUBLICATION
FIELDS
J.
We concur:
MILLER
Acting P. J.
SLOUGH
J.
33