Zhu v. Li

Background

A jury found for Plaintiff Jiajie Zhu on claims for breach of contract, breach of fiduciary duty, and intentional misrepresentation. Zhu later sought attorney’s fees and costs under an indemnification provision in a Purchase and Sale Agreement. In an earlier order, the court ruled that the provision allowed recovery for work related to the breach-of-contract claim but not the tort claims. The court directed Zhu to submit a revised accounting limited to the contract claim.

Zhu then sought permission to file a motion asking the court to reconsider that earlier order. He argued that the court had failed to consider an Operating Agreement for Teetex as another possible basis for recovering fees. Zhu said the agreement had been admitted as a trial exhibit and included in a request for judicial notice.

Reconsideration request

The court denied Zhu’s motion for leave to file a motion for reconsideration. Under Civil Local Rule 7-9, reconsideration of an interlocutory order may be allowed for specified reasons, including a material fact or legal argument that the court failed to consider, newly emerged material facts or a change in law, or a material difference in fact or law that could not reasonably have been known earlier. Reconsideration is an extraordinary remedy, and a party may not use it to repeat an argument that could have been presented earlier.

The court concluded that Zhu did not present the Operating Agreement as a basis for fees in his original fee motion. That motion relied on the Purchase and Sale Agreement, and Zhu did not identify the Operating Agreement or explain its relevance to the fee request. The court also stated that the trial exhibit and request for judicial notice did not, by themselves, present the agreement in connection with the fee motion. Zhu therefore failed to show that the court had manifestly failed to consider a material fact or dispositive legal argument previously presented.

Fee calculation

Zhu originally requested $376,373 in attorney’s fees and $91,654.20 in costs. In his supplemental statement, he reduced the request to $355,163 in fees and $32,534.30 in costs. He argued that most of the work could not be cleanly divided between the contract and tort claims.

The court applied California’s lodestar method, which calculates reasonable fees by multiplying the reasonable hours worked by a reasonable hourly rate. It found that Zhu’s time records provided enough detail and that the hours claimed were reasonable. It also found that the requested $400 hourly rate was reasonable. The defendants did not dispute the hourly rates or identify specific objections to the number of hours, but argued that fees for work unrelated to the contract claim should be excluded or reduced.

The court agreed that much of the work could not be cleanly divided between the claims. It stated that some work on motions and other litigation tasks could indirectly relate to the contract claim and should not be wholly excluded. However, because Zhu could recover fees and costs only for the contract claim, the court excluded expert-related amounts and imposed an additional reduction for work on the tort claims. It determined that awarding half of the adjusted request reasonably approximated the time spent on the contract claim.

Disposition

The court denied Zhu’s motion for reconsideration. The opinion’s opening states an award of $177,571 in attorney’s fees and $16,267.15 in costs. The analysis states an award of $177,581 in fees and $16,267.15 in costs, and the conclusion awards a total of $193,848.15, which matches the latter fee figure plus the stated costs. The opinion therefore contains an internal inconsistency regarding the attorney’s-fee amount.