Board of Trustees v. Santa Cruz Underground and Paving

Background

The underlying lawsuit was brought under the Employment Retirement Income Security Act and the Labor Management Relations Act to recover employer contributions allegedly owed under a collective bargaining agreement. Santa Cruz Underground and Paving, Inc. (SCUP) filed a third-party complaint against Vance Brown, Inc. (VBI), asserting claims for indemnity and breach of contract based on work SCUP performed under two subcontracts with VBI.

On June 28, 2022, the court dismissed SCUP’s third-party complaint under Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. The court found that SCUP’s claims were barred by the subcontracts’ limitations provision, determined that the provision was valid and enforceable, and dismissed the claims against VBI with prejudice. VBI then sought $71,348.52 in attorneys’ fees and costs under the subcontracts’ prevailing-party fee provision.

Parties’ Positions

VBI argued that it was the prevailing party and that the contracts required an award of reasonable fees and costs incurred in good faith. Its request covered work on the motion to dismiss, other work in the case, and the fee motion itself.

SCUP agreed that VBI was entitled to fees and costs under the subcontracts but argued that the amount requested was unreasonable. SCUP challenged the hours billed, research time, block billing, and fees incurred for the fee motion. It asked the court to reduce the award to $26,430.80. SCUP did not challenge VBI’s request for $229.02 in costs.

Court’s Analysis

The court applied California law, including California Civil Code section 1717, which enforces prevailing-party attorney-fee provisions in contract actions. The court found that the subcontracts’ fee provision was unambiguous and broadly covered fees and costs incurred in the litigation, not only fees related to the motion to dismiss. VBI therefore could recover fees for other reasonable litigation work as well.

The court used the lodestar method, which calculates fees by multiplying a reasonable hourly rate by the reasonable hours worked. It found the requested hourly rates reasonable: $585 per hour for VBI’s counsel’s 2021 work, $625 per hour for that counsel’s 2022 work, $790 per hour for another attorney, and $600 per hour for a third attorney.

The court also found the overall hours reasonable. It determined that approximately 69.1 hours were spent on the motion to dismiss, 13.4 hours on the fee motion, and 14.9 hours on other work in the case. The court rejected SCUP’s argument that the fees were excessive because the case involved a relatively modest amount or ended on a motion to dismiss, finding that the motion was more complex than SCUP characterized it.

The court declined to exclude 37.9 hours that included time entries referring to research. It found that those entries also described other work and that legal research was reasonably expected for the motion. The court also declined to impose percentage reductions for block billing because the invoices and the court’s review showed that the work was sufficiently related to the motion and that the overall time was reasonable.

Ruling

The court granted VBI’s motion for attorneys’ fees and costs and awarded VBI $70,723.52. The award included the requested $229.02 in costs. The court also vacated the scheduled fee-motion hearing and moved the case management conference to 2:00 p.m. on October 14, 2022; it stated that the conference would be vacated if the parties submitted a stipulated dismissal of the underlying claims.