Reynolds v. Ford Motor Co.

• Citation: 47 Cal.App.5th 1105,261 Cal.Rptr.3d 463
• Decision Date: 21 April 2020
• Docket Number: A154811
• Court: California Court of Appeals
• Parties: Peter REYNOLDS, Plaintiff and Respondent, v. FORD MOTOR COMPANY, Defendant and Appellant.

47 Cal.App.5th 1105

261 Cal.Rptr.3d 463

Peter REYNOLDS, Plaintiff and Respondent,

v.FORD MOTOR COMPANY, Defendant and Appellant.

A154811

Court of Appeal, First District, Division 3, California.

Filed April 21, 2020

Rosner, Barry & Babbitt, Hallen D. Rosner, Arlyn L. Escalante, San Diego; The Altman Law Group, Bryan Charles Altman ; Knight Law Group, Steve Mikhov, Lauren Andrea Ungs, Los Angeles, for Plaintiff and Respondent.

Horvitz & Levy, Lisa Perrochet, John A. Taylor Jr., and Allison W. Meredith, Burbank; Gordon Rees Scully Mansukhani, Spencer P. Hugret, San Francisco, for Defendant and Appellant.

Petrou, J. Defendant and appellant Ford Motor Company (Ford) appeals from a July 20, 2018 order awarding plaintiff and respondent Peter Reynolds (Reynolds) prevailing buyer’s attorney fees of $201,891 under the Song-Beverly Consumer Warranty Act. (Song-Beverly Act; Civ. Code, § 1790 et. seq.¹ )² We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In 2006, Reynolds purchased a 2005 Ford F-250 truck with a 6.0-liter diesel engine. Over the next six years, Reynolds had the truck repaired 15 times but it continued to malfunction. In 2013, Ford denied Reynolds’s request that it buy back or replace the truck under the Song-Beverly Act. Thereafter, Reynolds hired counsel to pursue a lawsuit against Ford. The second amended complaint, the operative pleading, was filed August 2014 and contained several causes of actions including one for relief under the Song-Beverly Act; Ford’s answer denied all liability.

Following extensive litigation, the parties settled the case in its entirety in September 2016. The terms of the settlement provided both that "[Ford] will issue one check, inclusive of all purported damages incurred by [Reynolds] in the amount of $277,500.00, except attorney’s fees and costs which will be resolved via agreement or motion," and that Ford agreed to "pay [Reynolds’s] attorney’s fees, costs, and expenses pursuant to Civil Code section 1794(d) in an amount determined by the Court, by way of noticed motion, to have been reasonably incurred by [Reynolds] in the commencement and prosecution of this action."

Motion for Attorney Fees

Reynolds filed a motion requesting fees in the aggregate lodestar sum of $308,696.25, comprised of $205,797.50 for legal services provided by Knight Law Group, LLC (formerly O’Connor and Mikhov, LLP) and The Altman Law Group plus a lodestar multiplier of 1.5 ($102,898.75). Reynolds submitted declarations from counsel Brian Altman and Steve Mikhov, verified billing statements, a National Consumer Law Fee Survey, and 51 court orders and rulings in a variety of Song-Beverly Act cases approving counsel’s requested hourly rates and fee requests. Reynolds affirmed the case was taken on a contingency fee basis, such that counsel would not be paid at all if he lost; neither the retainer agreement nor the specific fee terms of the agreement were provided.

Ford opposed, arguing that Reynolds’s counsel was not entitled to recover both a contingency fee and statutory fee, and therefore counsel was required to reimburse Reynolds for any statutory fee awarded under the Song-Beverly Act up to the value of the contingency fee. Reynolds’s position was that "[t]he existence of a contingency fee agreement" is not a relevant factor in determining whether a prevailing party is entitled to recover attorney fees under the Song-Beverly Act.

The court conducted a lodestar analysis and awarded Reynolds attorney fees in the aggregate sum of $201,891, based upon compensation for 457.85 hours at reasonable hourly rates ranging from $225/hour to $500/hour, plus a lodestar multiplier of 1.2, "reasonable and appropriate to accomplish the salutary objectives of the Song-Beverly Act."

The court ruled Reynolds had no obligation to disclose the fee terms of his retainer agreement with counsel:

"The lodestar calculation method requires that the court make determinations of ‘reasonableness’ at several different stages in that procedure. The court must determine whether the individual tasks of work performed were reasonabl[y] necessary as well as whether the number of hours billed for performing those tasks were reasonable. The court must also determine whether the hourly rate claimed for the work was reasonable in light of a number of factors. Finally, the court must consider a number of factors in determining whether the specific circumstances of the case require that the calculated fees be increased or decreased by a discretionary numerical factor. The final lodestar-based fee award is, thus of a reasoned analysis.

"Many statutory fee-award provisions begin with the lodestar method but are governed by the specific statutory requirement that the final fee award be ‘reasonable’ in nature. No such requirement is found in the Song-Beverly Act. The fee award must be based on the court’s calculation of the ‘actual time expended ... determined by the court to have been reasonabl[y] incurred .’ [ ( § 1794, subd. (d).) ] The legislature did not include a requirement that the court also determine [whether] the fees are reasonable in amount. Had the legislature intended such a requirement, it could easily have so stated. In this case, the court determines that the actual time expended for legal ... representation of plaintiff was reasonably incurred under the circumstances prevailing at the time the services were provided.

"The court’s review of the overall reasonableness of the attorney fees is, thus, restricted by the specific language in the fee award provision of the Song-Beverly Act. The court does not have the discretion to consider whether plaintiff’s attorney received additional compensation by ... way of a separate retaine[r] agreement."

DISCUSSION

A. The Song-Beverly Act

The Song-Beverly Act, which was enacted in 1970 (Stats. 1970, ch. 1333, § 1, p. 2478; § 1790 et seq. ) as "manifestly a remedial measure, intended for the protection of the consumer" ( Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 184, 28 Cal.Rptr.2d 371 ), includes a fee-shifting provision allowing for prevailing buyers to recover attorney fees under section 1794. "Attorneys considering whether to undertake cases that vindicate fundamental public policies may require statutory assurance that, if they obtain a favorable result for their clients, they will actually receive the reasonable attorney fees provided for by the Legislature and computed by the court. As the high court has recognized, the aim of fee-shifting statutes is ‘to enable private parties to obtain legal help in seeking redress for injuries resulting from the actual or threatened violation of specific ... laws.’ " ( Flannery v. Prentice (2001) 26 Cal.4th 572, 583, 110 Cal.Rptr.2d 809, 28 P.3d 860 [discussing California Fair Employment and Housing Act], quoting in part Pennsylvania v. Del. Valley Citizens’ Council (1986) 478 U.S. 546, 565, 106 S.Ct. 3088, 92 L.Ed.2d 439 [discussing Federal Clean Air Act].) The current version of subdivision (d) of section 1794 reads as follows:

"(d) 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, 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.)

By providing for a mandatory award of attorney fees and eliminating the court’s discretionary authority to deny an award found to be inappropriate,³ "our 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 . (1998) 17 Cal.4th 985, 994, 73 Cal.Rptr.2d 682, 953 P.2d 858 ; italics added.)

In determining the methodology to be used to award attorney fees under the Song-Beverly Act, the appellate courts have unanimously concluded the lodestar adjustment method of calculating attorney fees is appropriate for two reasons: (1) "the lodestar adjustment method is based on actual, reasonable attorney time expended as the objective starting point of the analysis," and (2) "the lodestar adjustment method is the prevailing rule for calculation of statutory attorney fees unless the statute expressly indicates a contrary intent, and no such contrary intent is apparent ...." ( Robertson v. Fleetwood Travel Trailers of California, Inc . (2006) 144 Cal.App.4th 785, 820, 821, 50 Cal.Rptr.3d 731 (italics in original); see, e.g., Goglin v. BMW of North America, LLC . (2016) 4 Cal.App.5th 462, 470, 208 Cal.Rptr.3d 646 [accord]; Doppes v. Bentley Motors, Inc . (2009) 174 Cal.App.4th 967, 997, 94 Cal.Rptr.3d 802 [accord].)

A trial court assessing attorney fees using the lodestar adjustment method "begins with a touchstone or lodestar figure, based on the ‘careful compilation of the time spent and reasonable hourly compensation for each attorney ... involved in the presentation of the case.’ " ( Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131–1132, 104 Cal.Rptr.2d 377, 17 P.3d 735, quoting in part Serrano v. Priest (1977) 20 Cal.3d 25, 48, 141 Cal.Rptr. 315, 569 P.2d 1303 ( Serrano III ).) Reasonable hourly compensation is based on "prevailing hourly rates" in the community, thereby "anchoring the calculation" to an objective standard. ( Ketchum v. Moses , supra , at p. 1132, 104 Cal.Rptr.2d 377, 17 P.3d 735.) Once the touchstone or lodestar figure (reasonable hours multiplied by reasonable rates) is calculated as "the basic fee," "it may be adjusted by the court [by applying a multiplier] based on factors, including ..., (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. The purpose of...