Arnold v. Saldan

Filed 3/28/07 Arnold v. Saldan CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

Appellants Janis Arnold and Fred Johnson rented an apartment from respondents Saldan, LLC and David Salma. They filed suit for various claims arising out of the landlord-tenant relationship and obtained a verdict totaling $8,633.31 on causes of action for breach of the implied covenant of habitability and illegal lockout. The court ordered that the parties bear their own costs and awarded $20,370 in statutory attorney fees to tenants under Civil Code sections 789.3 and 1942.4. Appellants have appealed this award, arguing that the amount of attorneys fees was too low, that the trial court erred by apportioning fees between the causes of action on which they prevailed and other claims that were dismissed prior to trial, and that other costs should have been included in the award. We affirm.

BACKGROUND

Appellants rented an apartment at 305 Webster Street in San Francisco from 1991 until March 2003. Respondents purchased the building in 2000 and filed an unlawful detainer action against Johnson in 2002. On September 9, 2002, the court entered a judgment of eviction terminating the lease held by Johnson. Respondents locked appellants out of the apartment on October 9, 2002, but on October 28, 2002, appellants regained possession under court order while the unlawful detainer case was pending on appeal. Appellants were evicted by court order in 2003.

On June 16, 2003, appellants filed suit against respondents and two neighbors in the building, Nick Martinez and Richard Trafton. After a demurrer was sustained as to three causes of action, appellants filed a first amended complaint that reasserted claims for negligence, intentional infliction of emotional distress, negligent infliction of emotional distress, violation of the San Francisco rent ordinance, breach of the implied covenant of quiet enjoyment, breach of the covenant of good faith and fair dealing, breach of contract, constructive eviction, retaliation, breach of implied warranty of habitability (tort), breach of implied warranty of habitability (contract), nuisance and negligent maintenance of the premises. Appellants alleged that while living at 305 Webster, they had been subjected to adverse habitability conditions such as lack of heat, lack of electricity, mold and mildew, and various other building code violations, as well as harassment by Martinez and Trafton, in a concerted effort to get them to vacate the premises.

The case proceeded to a jury trial against respondents on only two claimsthat appellants had been illegally locked out of the apartment from October 9, 2002, to October 28, 2002, and that they had been damaged by defective conditions in the apartment during their tenancy. The remaining claims were dismissed. The court directed a verdict in appellants favor on the lock-out claim and submitted the case to the jury for a determination of damages on that claim and a determination of liability and damages on the defective conditions claim. The jury returned a special verdict in favor of appellants and against respondent David Salma only totaling $8,633.31 ($2,865.62 each in compensatory damages plus statutory damages of $2,902.07 for defective conditions).

Appellants filed a motion to recover $5,798.22 in court costs and $95,030.60 in attorneys fees (including paralegal time). The request for fees was based on Civil Code section 789.3, subdivision (d), which provides that the court shall award reasonable attorneys fees to the prevailing party in a statutory claim for illegal lockout, and on Civil Code section 1942.4, subdivision (b)(2), which provides that in an action for statutory habitability violations against a landlord, [t]he prevailing party shall be entitled to recovery of reasonable attorneys fees and costs of the suit in an amount fixed by the court. Respondents filed a motion for costs on the ground that appellants had filed the action as an unlimited civil case, but had recovered a judgment that could have been rendered in a limited civil case.

The trial court ordered that each side bear its own court costs and awarded $20,370 in attorneys fees to appellants as the prevailing parties. It indicated in its written order that it was apportioning the fees and awarding only those that were attributable to the statutory causes of action that were litigated at trial, consistent with Bell v. Vista United School Dist. (2000) 82 Cal.App.4th 672, 686-687.

DISCUSSION

Appellants argue that they were entitled to recover the full amount of their attorneys fees from respondent Salma without apportionment because the statutory claims on which they obtained a favorable judgment were factually intertwined with the other causes of action that were dismissed before trial. (See Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1133-1134.) They also contend the trial court abused its discretion in assessing the reasonable value of some of the legal services provided, and erred as a matter of law when it denied them their court costs. We disagree.

Statutory attorneys fees are recoverable as an item of costs under Code of Civil Procedure section 1033.5, subdivision (a)(10).[1] Section 1033, subdivision (a), provides, Costs or any portion of claimed costs shall be as determined by the court in its discretion in a case other than a limited civil case in accordance with Section 1034 where the prevailing party recovers a judgment that could have been rendered in a limited civil case. The demarcation between limited and unlimited civil cases generally depends on whether the amount in controversy exceeds $25,000. ( 85, subd. (a).)

Under the plain language of section 1033, subdivision (a), the trial court has the discretion to deny attorneys fees that are otherwise recoverable by statute when the prevailing party filed the action as an unlimited civil case but obtained a judgment that could have been rendered in a limited civil case, i.e., a judgment of less than $25,000, excluding any potential award of costs or attorneys fees. (Steele v. Jensen Instrument Co. (1997) 59 Cal.App.4th 326, 330-331; Dorman v. DWLC Corp. (1995) 35 Cal.App.4th 1808, 1815-1817.)[2] Factors relevant to this discretionary decision include the amount of the costs incurred, the amount of recovery relative to the maximum amount recoverable in a limited civil case, and whether the plaintiff reasonably and in good faith believed that recovery was likely to exceed the maximum amount for limited civil cases. (See Dorman v. DWLC Corp., supra, 35 Cal.App.4th at p. 1816.) The decision to deny or reduce fees must be affirmed unless it amounts to an abuse of discretion. (See id. at p. 1815.)

Here, appellants filed their action as an unlimited civil case in which compensatory, statutory and punitive damages were sought according to proof. They obtained a total judgment against Salma of only $8,633.31, well under the maximum amount recoverable for limited civil cases, and prevailed on only two causes of action. The court determined that under the circumstances, it was appropriate to award some attorneys fees, but to apportion them and thus limit recovery to the causes of action on which appellants prevailed.

Plaintiffs argue that section 1033, subdivision (a), does not apply to a party who reasonably and in good faith files an action as an unlimited civil case, but is surprised by an unexpectedly low verdict. Citing Valentino v. Elliott Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692, 701-702, they claim they are entitled to costs and statutory attorneys fees as a matter of right because it was reasonable to assess their damages at over $25,000 when they filed suit. The appellate court in Valentino affirmed an order denying costs to a plaintiff who appeared to have exaggerated her physical ailments, although the court noted that her filing in superior court was seemingly reasonable when her medical bills were high and a settlement judge had valued the case at more than twice the jurisdictional limit. (Id. at p. 702.) Here, plaintiffs have not affirmatively demonstrated that it was reasonable to assume their claims would net a higher verdict than they obtained.

It is apparent from the courts written order than the decision to apportion fees was a thoughtful and reasonable exercise of judicial discretion: It is clear that a significant amount of the work done by both sides in preparation for trial was attributable to the dismissed claims. [] It is probably inaccurate to say that work on the claims that were actually tried amounted to twenty percent of the total pretrial work. The time necessary to prepare the two surviving claims for trial was probably much less than that, for several reasons. First, the habitability claims were made in the underlying unlawful detainer trial. The information, such as the Department of Building Inspection inspections and notices of violation, [was] in plaintiff[s] counsels possession at the inception of this case, and would have required very little, if any, significant preparation time or other work. All counsel needed to do was confirm that the repairs were never made, and the reasons therefore. . . .[] Moreover, the lockout issue was decided based upon pleadings and undisputed facts, such as the dates plaintiffs were not in possession, and the amount of their rent at the time. These issues could not reasonably require significant attorney time preparing to litigate.

Appellants argue that the court abused its discretion when it reduced the attorney time allowable for certain services, especially time that was not contested by respondents in the trial court. We reject the claim. The trial court went through each billing entry submitted to it and explained the reason for every reduction it made. Some of the reductions were the result of apportionment; with others, the court determined that the time billed was excessive, was not adequately differentiated from other services, or did not reflect a compensable legal service. The total fees awarded were more than double the verdict. Appellants have not carried their burden of establishing that the court acted arbitrarily or exceeded the bounds of reason in setting the amount allowable fees. (See Dorman v. DWLC Corp., supra, 35 Cal.App.4th at p. 1815.)

Nor are we persuaded that the trial court abused its discretion in reducing the hourly rate of plaintiffs attorneys fees from $350 to $300. Defense counsel submitted a declaration in opposition to appellants motion for fees, in which he stated under penalty of perjury that he had billed $150 an hour to defend the case and the prevailing rate for landlord-tenant legal work in San Francisco is $200. This supported the reduction to a $300 hourly rate.

Finally, we disagree that the court erred by ordering each side to bear its own costs. Section 1033, subdivision (a), gave the court the discretion to deny costs altogether. Instead, the court awarded appellants attorneys fees and disallowed other costs. The court could reasonably determine that even though appellants had obtained a net monetary recovery that would entitle them to costs in an ordinary case, it was appropriate that each side shoulder its own litigation expenses when no damages were assessed against respondent Saldan, LLC at trial and respondent Salma effectively prevailed on the dismissed counts.

The judgment is affirmed. Costs on appeal are awarded to respondent Salma.

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McGuiness, P.J.

We concur:

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Parrilli, J.

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Siggins, J.

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[1] Further statutory references are to the Code of Civil Procedure unless otherwise indicated.

[2]Steele and Dorman interpreted a former version of section 1033, subdivision (a), that was in effect before the trial courts were unified in 1998, and provided, In the superior court, costs or any portion of claimed costs shall be as determined by the court in its discretion in accordance with Section 1034 where the prevailing party recovers a judgment that could have been rendered in a court of lesser jurisdiction. (Steele v. Jenson Instrument Co., supra, 59 Cal.App.4th at p. 331; Dorman v. DWLC Corp., supra, 35 Cal.App.4th at p. 1813.) The same concept is continued in the current version of the statute, which substitutes case other than a limited civil case for superior court and limited civil case for court of lesser jurisdiction.