Virtue v. Zamora et al

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
SAN FERNANDO VALLEY DIVISION
In re:
Continental Coin Corporation
Debtor(s).
Case No.: 1:00-bk-15821-GM
Adv No: 1:07-ap-01291-GM
Chapter 11
MEMORANDUM OF OPINION REGARDING
PLAINTIFF’S MOTION FOR ATTORNEYS
FEES
Rodger Virtue
Plaintiff(s),
v.
Hill Farrer & Burrill LLP, Liberty Mutual
Insurance Company, Daniel J. McCarthy,
Nancy Zamora, Zamora & Hoffmeier,
APC
Defendant(s).
Date: July 31, 2012
Time: 10:00 a.m.
Courtroom: 303
On December 16, 2011 Defendant Nancy Zamora (“Zamora”), in her capacity as
chapter 11 Trustee, filed a counter-claim against Plaintiff Rodger Virtue (“Virtue”) and a
Complaint against Daniel McCarthy (McCarthy”) and Hill, Farrer & Burrill LLP (“HFB”).1
The Co-Defendants filed their answers to the complaint and on February 17, 2012 they
filed a special motion to strike the counter-claim and complaint pursuant to Cal.Code
1 1:07-ap-1291-GM, dkt. 37. Unless otherwise specified, all docket references are to this adversary
proceeding. Virtue continued to be represented by HFB, but McCarthy and HFB were represented by
Waxler Carner & Brodsky LLP. For that reason, some documents were filed jointly and some were filed in
duplicate on behalf of each of the two groups of defendants. Where appropriate, Virtue, McCarthy, and
HFB will be jointly referred to as “co-defendants.”
FILED & ENTERED
AUG 05 2013
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	Harraway
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Civ. Proc. §425.16 (the “anti-SLAPP motion”).2 On April 30, 2012, the Court entered its
Memorandum of Opinion and its Order granting the motion and striking the counter-
claim/complaint pursuant to Cal.Code Civ. Proc. §425.16.3 On May 30, 2012 the Co-
Defendants filed this motion for fees under Cal.Code Civ. Proc. §425.16(c). On June 27,
2012, a motion for stay pending appeal was denied, as was the motion to withdraw the
motion for fees.4 On May 6, 2013 the appeal was dismissed by the District Court for the
failure of Zamora to timely file her opening brief.5
The motion for fees was continued from time to time with the final brief being filed
on August 24, 2012. For the hearing on July 31, 2012, the Court issued the following
tentative ruling (typographical errors corrected):
I previously denied a stay as to the liquidation of the fees. There is no motion to
stay payment of them.
The Virtue parties are entitled to their fees as the prevailing party on the anti-
SLAPP motion. The application states that Hill Farrer did the research, drafting,
and arguing both on its own behalf and on behalf of Virtue and thus it allocated
half of the time to Virtue and half to the firm. It is not seeking reimbursement for
the half allocated to the firm since a law firm is not entitled to recover its fees as
prevailing party under the anti-SLAPP statute for services performed by a
member of that firm. Carpenter & Zuckerman, LLP v. Cohen, 195 Cal.App.4th
373 (2011).
In opposition, the Trustee argues that Virtue is not the prevailing party because
the matter is on appeal; there can be no recovery for the fees billed by Waxler,
Carner & Brodsky because it represented Hill Farrer and McCarthy, not Virtue;
there cannot be a recovery for fees and costs related to the non-anti-SLAPP
causes of action; and there are no time entries solely for the anti-SLAPP motion
on behalf of Virtue.
The Waxler and H&F reply covers a variety of grounds. As to jurisdiction, this is
not the vacating or modification of an order on appeal, but the enforcement of
one. They also request an additional award of fees of $5,047.50 for the anti-
SLAPP motion and this fee motion as well as $2,177.50 for opposing the motion
for stay. As to the fact that Waxler and H&F were not mentioned in the
Memorandum of Opinion, it did not have to specifically allow fees and would only
preclude the request if it so stated, which it did not. The only fees that H&F
2 Dkt. 53.
3 Dkt. 63, 64.
4 Dkt. 90, 91.
5 1:12-cv-04981-PA.
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request are those actually paid to Waxler. The payment of fees should not be
stayed pending outcome of the appeal.
Proposed Ruling
The Court is well-aware of the pending appeal and has previously decided that it
is appropriate to liquidate the attorneys’ fees. There is no stay pending appeal
as to that. I have not yet decided whether it is appropriate to allow execution on
the determined amount and there is no motion on that issue for a stay pending
appeal. As to jurisdiction, this is not a modification of the prior order, but
enforcement of it.
There is no dispute that Virtue is entitled to attorneys' fees once he has been
designated as the prevailing party. Hill Farrer and McCarthy (jointly H&F) were
named in claims 4, 6, 7, 8, and 9, all of which were dismissed against H&F in that
the Trustee did not meet her anti-SLAPP burden. (doc. 64, 17:9-12). Although
other grounds for dismissal are discussed in the memorandum of opinion, they
do not vitiate the ruling that the third party claim is dismissed under anti-SLAPP.
However it is true that although the memorandum and the order specifically order
Virtue to seek his fees, they do not preclude H&F from doing so.
Since H&F were only named in the anti-Slapp causes of action, there is no
reason to apportion fees paid to an outside firm (WCB) for bringing the motion to
dismiss. Andrew Waxler supervised the whole process of the opposition, which
may have been limited to the H&F motion, but also included the Virtue one.
Since this is an outside firm, H&F is entitled to recoup the fees paid, as is Virtue.
Exhibit A to the fee motion indicates that $5,047.50 of the time (and costs, I think)
are attributable to the anti-SLAPP motion. While these are summarized in the
Waxler declaration, the individual time entries are not highlighted, so I cannot tell
which are included. And it is likely that the work on the anti-SLAPP and other
parts of the motion are inseparable given the way that the time records were
kept.
The allocation of the H&F fees between that firm and Virtue as to the anti-SLAPP
motion is appropriate. However, Virtue is not entitled to his fees on the motion to
dismiss as to claims 1, 2, and 3 (claim 10 was also dismissed, but that was due
to the dismissal of other claims). My review of the Motion (doc. 53) shows that
the part that concerned the first and second causes of action are set forth in pp.
17-20. The rest of the arguments are the basis of the anti-SLAPP motion, which
required that the Court determine whether the plaintiff has a probability of
prevailing on each claim asserted.
There is no reliable way to apportion the requested fees, so the court will use the
somewhat crude method of dividing them by virtue of the amount of pages
attributed to them. There are twenty pages of law and argument in this motion of
which four are about the first and second causes of action. Thus, I hold that 20
percent of the fees attributable to the motion, its argument and appearance are
for non-anti-SLAPP work and no attorney's fees can be allowed for those. Of the
remaining 80 percent. half are for work done on behalf of Virtue and the other
half for H&F.
As to the Waxler fee request, the total fees in the initial application were $7,548.
Since 80 percent of this is $6,038.40 and this exceeds the requested amount of
$5,047.50, I will allow $5,047.50 plus half the costs which will be $44.22 . All of
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the supplemental fees are dealing with anti-SLAPP and they are allowed as
requested in the amount of $2,177.50. Thus the total fees payable to Waxler
Carner Brodsky, LLP is $7,269.22.
As to the other specific objections to the fees, these are overruled.
Applying the above formula to the H&F fee request, the initial request is for a
total of $11,594 (prior to the courtesy discount). Half of that is attributable to
H&F's own motion, leaving $5,797. Eighty percent is for the anti-SLAPP work,
which ends up being $4,637.60 in fees and half the costs at $22.52. The
supplemental fee request for $6,595 is all for anti-SLAPP and will be divided in
half so that $3,297.50 is attributed to Virtue as are half the costs at $5.45. Thus
the total fees payable to Hill, Farrer & Burrill LLP is $7,963.07.
At that hearing the Court ordered that the fees due to the Waxler firm would be
$7,313.44, but the amount due to HFB was submitted with a final opposition brief due
by August 17, 2012. On August 17 Zamora filed her supplemental opposition and on
August 24, 2012 the co-Defendants filed their reply to the supplemental opposition.6
The issue as to HFB’s fees was the amount that should be paid for preparing the
motion for fees, reviewing the opposition, preparing the reply, and attending the
hearing.7 HFB also pointed out that the tentative ruling as to the fees for the anti-
SLAPP motion itself had overlooked an invoice in the amount of $9,057.8
In violation of a self-imposed practice that I have employed since my early days
on the bench, I did not continue the July 31 hearing and, unfortunately, this matter
simply dropped off my calendar and out of my chain of reference. I again became
aware of it after the dismissal of the appeal and am now ruling.
Zamora’s Supplemental Opposition
Zamora objects to the Court’s proposed apportionment formula, but does not
suggest another alternative. However, she states that even if the Court uses the
6 Dkt. 99, 100.
7 Transcript of hearing of 7/31/12 attached to dkt. 99, Ex. A, 5:17-7:5.
8 Id., Ex. A, 7:9-25.
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proposed one, it should also include the third cause of action with the first two since that
was also a non-anti-SLAPP cause of action. The third cause of action was based on
Plaintiff’s breach of duty as a member of the Creditor’s Committee, which is based on
federal bankruptcy law. The arguments as to the third cause of action in the motion to
dismiss were improperly included with those based on state law, but it was actually
based on federal bankruptcy law. Thus an allowance must be made for this.
Beyond that, the Court was correct that there can be no recovery for fees
incurred for self-representation by McCarthy and HFB. McCarthy’s argument at the
hearing is incorrect. The time spent by McCarthy and HFB in preparing the fee motion
and the supplement and opposing the Trustee’s motion for stay pending appeal were
not services only for Virtue. These were also to recover fees that Waxler billed HFB.
And the Trustee’s motion for stay pending appeal related to more than just the fee
motion.
Reply to the Supplemental Opposition
Defendants request a total award of $19,226.95 for representation by HFB of
Virtue and an additional $7,313.44 for the Waxler firm’s representation of HFB and
McCarthy. Each is broken down into separate activity groups:
Representation of Virtue:
Anti-SLAPP motion - $7,500.95
Motion for Attorneys’ Fees - $5,131.00
Opposition to Motion for Stay - $6,595.00
Representation by Waxler of HFB and McCarthy
Anti-Slapp motion - $5,047.50
Opposition to Motion for Stay - $2,177.50
The Waxler amount is not in dispute and was ordered by the Court at the July 31
hearing.
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As to the Virtue matter on the Anti-SLAPP motion, as argued at the hearing, the
Court made a mathematical error by not including some of the invoices, so the
beginning gross amount should have been $20,651. Then the Defendants had reduced
it by 50 percent to account for work performed on behalf of HFB. The Court then
reduced that by another 20 percent to factor in the non-anti-SLAPP causes of action.
No further reduction should be required.
As to the motion for attorneys’ fees, these would be payable only to Virtue to
compensate him for what he has actually paid to HFB for work performed on that
motion. This motion was solely in pursuit of fees actually awarded by the Court and not
of any unawarded fees. Thus none of the attorney time was in self-representation
because the actual fee award did not include any fees for self-representation (having
already voluntarily been reduced by 50 percent for that issue).
As to the opposition to the motion for stay, this related back to the motion for
attorney’s fees and the fees actually awarded by the Court, which include no award for
self-representation.
The Ruling
As to self-representation, this is accounted for by the reduction of 50 percent on
the anti-SLAPP motion. There is no self-representation issue on the motion for
attorney’s fees, which was solely to reimburse Virtue. The opposition to the stay covers
both the anti-SLAPP motion and the motion for attorney’s fees, but I find that the Waxler
firm handled representation of HFB and thus there was no self-representation
component on that.
As to a further reduction for work done on the third cause of action, I have stated
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that I am using a very crude measurement, but it is the best that I can find. The third
cause of action is included as part of the motion to strike with the fourth through tenth
causes of action on pages 8-11. This actually covers only three pages of text. No extra
work was done as to the third cause of action – it merely floated along with the overall
argument. Therefore no further apportionment will be made as to the third cause of
action.
An issue has been raised as to the timing of the payment. Co-Defendants do not
dispute that the payment will be from the Estate since Zamora brought the
complaint/counter-claim solely in her capacity as the Chapter 11 Trustee. Although
there appears to be sufficient monies in the estate to pay all administrative expenses in
full, Zamora argues that since the Court has deferred payments her fees, it is
appropriate to defer these. The difference is that this complaint/counter-claim stands
alone and separate from the much more complex issues in this adversary proceeding.
The anti-SLAPP fees are mandated by statute. Therefore, as soon as the Order on this
motion becomes final, the Trustee is to distribute to HFB and to the Waxler firm the
amounts set forth in the Order.
The award for the representation of Virtue by HFB will be $19,226.95.
###
Date: August 5, 2013
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This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012 F 9021-1.1.NOTICE.ENTERED.ORDER
NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify): _ MEMORANDUM OF
OPINION REGARDING PLAINTIFF’S MOTION FOR ATTORNEYS FEES
was entered on the date indicated as AEntered@ on the first page of this judgment or order and will be
served in the manner stated below:
1. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) B Pursuant to controlling
General Orders and LBRs, the foregoing document was served on the following persons by the court via
NEF and hyperlink to the judgment or order. As of (date)________________, the following persons are
currently on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive
NEF transmission at the email addresses stated below.
Daniel J McCarthy dmccarthy@hillfarrer.com,
spadilla@hillfarrer.com;docket@hillfarrer.com
Anthony N Zamora zamora3@aol.com
Service information continued on attached
page
2. SERVED BY THE COURT VIA UNITED STATES MAIL: A copy of this notice and a true copy of this
judgment or order was sent by United States mail, first class, postage prepaid, to the following persons
and/or entities at the addresses indicated below:
Zamora & Hoffmeier APC
633 W. 5th Street Suite 2600
Los Angeles, CA 90071
Andrew Waxler
1960 E. Grand Ave. Suite 1210
El Segundo, CA 90245
Service information continued on attached
page
3. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment
or order which bears an AEntered@ stamp, the party lodging the judgment or order will serve a complete
copy bearing an AEntered@ stamp by United States mail, overnight mail, facsimile transmission or email
and file a proof of service of the entered order on the following persons and/or entities at the addresses,
facsimile transmission numbers, and/or email addresses stated below:
Service information continued on attached
page
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This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012 F 9021-1.1.NOTICE.ENTERED.ORDER
Case 1:07-ap-01291-GM Doc 165 Filed 08/05/13 Entered 08/05/13 16:22:37 Desc
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