Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, No. GIC848529 Frederic L. Link, Judge.
McDONALD, J.
Defendants Michael Huberman and Seth Huberman (together the Hubermans) appeal a judgment awarding plaintiff Timothy C. Karen attorney fees of $448,725 out of $736,500 in contingency attorney fees obtained by the Hubermans in representing certain clients who previously had discharged attorney Karen during the course of an arbitration proceeding against a stockbroker and his company. On appeal, the Hubermans contend the trial court erred: (1) in determining the quantum meruit or reasonable value of the legal services provided by Karen to those clients prior to his discharge; and (2) by awarding Karen $10,000 in attorney fees and costs pursuant to Code of Civil Procedure section 2033.420.
All statutory references are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
Karen is an attorney who represents investors suffering losses as a result of fraud or other misconduct by stockbrokers and investment promoters. In or about October 2001, a group of investors (Mayne claimants) retained Karen to prosecute claims against stockbroker John P. Burke, Jr., and his employer U.S. Bancorp Piper Jaffray, Inc. (Piper). Each of the Mayne claimants apparently entered into a retainer agreement pursuant to which Karen agreed to prosecute their claims and advance all costs necessary to prosecute their claims, and Karen was to receive a contingency fee of one-third of any amount obtained on their behalf, plus reimbursement of all costs advanced by him.
The group of investors, referred to as the "Mayne claimants" by the parties, apparently included Frederick C. and Lori Mayne, Charles C. and Suzanne M. McKevitt, Joseph L. and Tracy M. Anderson, Daniel A. Biner, Scott and Barbara Chelberg, John J. Cottrell, Kurt R. Homfelt, Ken Lorey, Charles A. Novotny, Michael G. and Susan G. Mayne, Dino and Alyssa Stathakis, Kaine Stathakis, Andrew T. and Jennifer V. Sundberg, Peter S. and Patricia A. Zdravecky, Pattie Dikes, Howard M. Lunceford, and Barry and Jane Noebel.
In January 2002, Karen filed a complaint in San Diego County Superior Court on behalf of the Mayne claimants against Burke, Piper, and Brian J. Troth (apparently Burke's supervisor at Piper). On or about March 6, the complaint was dismissed pursuant to Karen's request and his stipulation with those defendants. That stipulation noted that because the Mayne claimants had signed arbitration agreements, they would instead pursue their claims against the defendants in arbitration before the National Association of Securities Dealers Regulation, Inc. (NASD).
On or about March 11, Karen, on behalf of the Mayne claimants, filed with NASD a statement of claim against Burke, Piper, and Troth. In June, Karen, on behalf of Barry Noebel and others similarly situated, filed a class action complaint against Burke, Piper, and Troth. However, the trial court apparently granted the defendants' petition to compel arbitration and stayed the action pending resolution of the dispute in arbitration.
On or about August 4, 2003, Karen filed a first amended statement of claim with NASD. That statement of claim alleged that Burke recommended investments unsuitable for the claimants.
On September 13, 2004, the NASD arbitration proceedings began on the claims against Burke, Piper, and Troth. On December 1 (after 15 days of arbitration hearings), 10 claimants settled their claims and subsequently dismissed their claims with prejudice. During the proceedings, the claims against Troth were dismissed with prejudice pursuant to his motion for nonsuit.
On August 7, 2003, Peter S. and Patricia A. Zdravecky withdrew their claims without prejudice. On December 11, 2003, Michael G. and Susan G. Mayne also withdrew their claims without prejudice.
Those ten claimants were Daniel A. Biner, John J. Cottrell, Kurt R. Homfelt, Barry Noebel, Charles A. and Melissa A. Novotny, Dino and Alyssa Stathakis, Kaine Stathakis, and Howard M. Lunceford. The total amount of their settlements apparently was $231,080.
Also on or about December 1, 10 of the 12 remaining claimants discharged Karen as their attorney and retained the Hubermans on a contingency fee basis to represent them during the remainder of the arbitration proceedings. On December 17, Karen asserted a lien for unpaid attorney fees and costs on any settlement or award obtained by those claimants. The Hubermans represented those 10 claimants during the remaining nine days of arbitration proceedings.
Those ten claimants were Frederick C. and Lori Mayne, Charles C. and Suzanne M. McKevitt, Joseph L. and Tracy M. Anderson, Ken Lorey, Andrew T. and Jennifer V. Sundberg, and Pattie Dikes. The two remaining claimants who continued to be represented by Karen were Scott and Barbara Chelberg, who subsequently dismissed their claims on February 28, 2005.
On or about May 5, 2005, NASD issued its arbitration award, finding Burke and Piper jointly and severally liable and awarding the 10 remaining claimants (all of whom were then represented by the Hubermans) compensatory damages in an aggregate amount of $2,209,500.
On June 3, Karen filed the instant complaint against the Hubermans seeking declaratory relief regarding the amount of attorney fees due him out of the total $736,500 one-third contingency fee obtained by the Hubermans from the 10 claimants who had discharged Karen in December 2004 and subsequently obtained an arbitration award. Karen sought an equitable allocation of the contingency fee amount and argued that because he performed the vast majority of the work leading to the arbitration award, he should be entitled to the majority of the $736,500 contingency fee. Because Karen's claim for reimbursement of costs advanced had been fully resolved, the complaint did not seek any award for costs advanced from either the Hubermans or his clients. In support of Karen's claim for attorney fees, he submitted a "best estimate" document itemizing specific legal work performed by Karen and his paralegals, the date of that work, the specific time spent on that work, and the hourly rates of Karen and his paralegals.
Karen and the Hubermans agreed to payment of $100,000 each from the $736,500 contingency fee amount held in escrow by a third party, and $536,500 remained in escrow subject to resolution of the complaint.
Following a four-day bench trial, the trial court issued its statement of decision by stating its findings and conclusions on the record. The court stated in part:
"The amount of attorney's fees to be awarded is within the court's sound discretion taking into account the type and difficulty of the matter, counsel's skill vis-a-vis the skill required to handle the case, counsel's age and experience, the time and attention counsel gave to the case, and the outcome. [¶] An experienced trial judge is best qualified to decide the value of an attorney's services in any given matter. . . .
"Spires [v. American Bus Lines (1984) 158 Cal.App.3d 211 (Spires)] talks about what is to be divided . . . where a contingent fee is insufficient to meet the quantum meruit claims of both discharged and existing counsel, which is present here. [¶] There is insufficient money in the fee to satisfy both of you, [so] the proper rule is to use an apportionment pro rata formula which distributes the contingent fee among all discharged and existing attorneys in proportion to the time spent on the case by each. Such a formula ensures each attorney is compensated in accordance with work performed while assuring their clients were -- are not making double payments. We don't have a double payment situation here.
"As far as this court being an experienced trial judge, it's important for the record to reflect that this court was in private practice for a significant period. That this court did handle criminal and civil matters. That this court did handle contingency matters. And this court over the [25 and one-half] years on the bench has had to deal with a lot of cases involving contingency fees."
The court continued:
"Mr. Karen started this case and basically the way I look at it he was on this case for four years, two months; 50 months. The Hubermans were on this case for basically six months from 12-5-04 to 5-5-05.
"So Mr. Karen was on this case, and he filed everything he could possibly file. . . . [¶] . . . [H]e did everything he could on behalf of his clients."
The court further noted: "Mr. Karen fronted the costs. Mr. Karen did all of the discovery and it was not an easy discovery process." "[Karen] did everything he could to get discovery and he got it. He filed all the necessary papers, all necessary motions, all necessary briefs, et cetera. And he took them all the way down to the [altar] and they were halfway through the wedding proceeding, and the bride and groom got cold feet because they wanted a guarantee and they didn't get their guarantee. [¶] [Karen] didn't fire them, he didn't abandon them. He said, look if you have lost confidence in me, get a second opinion and that's what [they] did." "So what [the Hubermans] basically did is they took what Mr. Karen had put together and they used it and that's the materials that they used to finish this case." "There has to be an apportionment [of the contingency fee]." The trial court did not find the Hubermans' expert believable and gave little credence to his testimony. In contrast, the court found the testimony of Karen's expert compelling and credible, having backed up his opinion with evidence.
In conclusion, the trial court stated:
"Based on the evidence that I have seen in this case, the testimony and the exhibits that have been produced here, the fee will be apportioned; 65 percent to Mr. Karen, 35 percent to the Hubermans. [¶] That means we are talking about . . . $536,500; that basically comes out to $348,725.00 for Mr. Karen; $187,775.00 for the Hubermans. They already had received $100,000.00 each and of course that gets tacked on to that."
On October 20, the court entered a judgment consistent with its statement of decision.
As a result, Karen received 61 percent and the Hubermans received 39 percent of the total contingency fee of $736,500.
On or about November 3, Karen filed a motion for an award of $30,000 in attorney fees and costs against the Hubermans pursuant to section 2033.420. On or about November 6, he filed a first amended motion for an award of $63,683.66 in attorney fees and costs pursuant to section 2033.420. On December 12, the trial court issued an order awarding Karen $10,000 in attorney fees and costs under section 2033.420. The judgment was interlineated to reflect that award.
The Hubermans timely filed a notice of appeal.
DISCUSSION
I
Trial Court's Determination of Reasonable Value of Karen's Legal Services
The Hubermans contend the trial court erred in determining the reasonable value of the legal services Karen provided to those clients who discharged him and then retained the Hubermans.
A
The parties disagree on whether we should apply an independent or abuse of discretion standard in reviewing the trial court's determination of the reasonable value of Karen's legal services. We conclude that because the trial court applied appropriate legal principles (as discussed below) in making that determination, we review its determination for abuse of discretion. In the context of awards of statutory attorney fees, "[o]n review of an award of attorney fees after trial, the normal standard of review is abuse of discretion." (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142.) However, independent review may be warranted on the question of whether the legal criteria for an award have been satisfied. (Ibid.) Alternatively stated, "it is a discretionary trial court decision on the propriety or amount of statutory attorney fees to be awarded, but a determination of the legal basis for an attorney fee award is a question of law to be reviewed de novo. [Citation.]" (Ibid.)
Because Karen is legally entitled to an award of attorney fees under the principle applied by the trial court, the trial court's determination of the amount of that award is subject to our review only for abuse of discretion. An abuse of discretion is shown when the trial court's ruling exceeds the bounds of reason. (People v. DeSantis (1992) 2 Cal.4th 1198, 1226; Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 972.) The abuse of discretion standard of review "is a deferential standard of review that requires us to uphold the trial court's determination, even if we disagree with it, so long as it is reasonable. [Citation.]" (Stull v. Sparrow (2001) 92 Cal.App.4th 860, 864.)
B
In California, a client has the absolute right to discharge his or her attorney at any time, with or without cause. (Fracasse v. Brent (1972) 6 Cal.3d 784, 790 (Fracasse).) A discharged attorney is nevertheless entitled to recover the reasonable value of the services provided to the time of discharge. (Id. at pp. 791-792.) "[A]n attorney employed under a contingent fee contract and discharged prior to the occurrence of the contingency is limited to quantum meruit recovery for the reasonable value of services rendered up to the time of discharge, rather than the full amount of the agreed contingent fee. [Citations.] The rule is based upon the premise that a client should not be forced to pay a discharged attorney the compensation called for in the contract, since that amount may reflect neither value received nor services performed and could result in double payment of fees first to the discharged [attorney] and then to a new attorney. [Citations.]" (Spires, supra, 158 Cal.App.3d at pp. 215-216.) In the context of a contingency fee agreement, a discharged attorney's action for reasonable compensation first accrues when the contingency occurs (i.e., the client obtains recovery by settlement or judgment). (Fracasse, at pp. 791-792.)
However, "where . . . the contingent fee is insufficient to meet the quantum meruit claims of both discharged and existing counsel, the proper application of the Fracasse rule is to use an appropriate pro rata formula which distributes the contingent fee among all discharged and existing attorneys in proportion to the time spent on the case by each. Such a formula insures that each attorney is compensated in accordance with work performed, as contemplated by Fracasse, while assuring that the client will not be forced to make a double payment of fees." (Spires, supra, 158 Cal.App.3d at p. 216.)
Although Fracasse did not set forth any precise formula for determining the reasonable value of a discharged attorney's services, it noted "one of the significant factors in determining the reasonableness of an attorney's fee is 'the amount involved and the result obtained.' [Citations.]" (Fracasse, supra, 6 Cal.3d at p. 792.) Fracasse also cited Los Angeles v. Los Angeles-Inyo Farms Co. (1933) 134 Cal.App. 268, 276 (overruled on another ground in Metropolitan Water Dist. v. Adams (1944) 23 Cal.2d 770, 772-773), which set forth factors that should be considered in determining a reasonable fee. (Fracasse, at p. 791.) Those factors include:
Fracasse contemplated the possibility that the reasonable value of the discharged attorney's service may be the entire contingency fee in circumstances in which the client discharges the attorney " 'on the courthouse steps' " and then "executes a settlement obtained after much work by the attorney." (Fracasse, supra, 6 Cal.3d at p. 791.)
"The nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure of the attorney's efforts, [and] the attorney's skill and learning, including his age and experience in the particular type of work demanded." (Los Angeles, supra, 134 Cal.App. at p. 276.)
Alternatively stated, one court noted in another context:
"The amount of attorney fees to be awarded is within the court's sound discretion, taking into account the type and difficulty of the matter, counsel's skill vis-a-vis the skill required to handle the case, counsel's age and experience, the time and attention counsel gave to the case, and the outcome. [Citation.]" (Padilla v. McClellan (2001) 93 Cal.App.4th 1100, 1107.)
We see no reason why those same factors should not be considered by a trial court in determining the reasonable value of an attorney's services in a Fracasse/Spires-type case. Padilla further stated: "An experienced trial judge is best qualified to decide the value of an attorney's services in a given matter, and on appeal we will not reverse that decision unless it is clearly wrong. [Citation.]" (Padilla v. McClellan, supra, 93 Cal.App.4th at p. 1107.)
C
The Hubermans assert the trial court erred in determining the reasonable value of Karen's legal services because it considered work Karen performed for both those clients who did not discharge him and those who later discharged him and retained the Hubermans. The Hubermans argue that because Karen was compensated for work pursuant to contingency fee agreements with those clients who did not discharge him (and received settlement amounts), the trial court should have excluded or disregarded Karen's common work for both groups in determining the reasonable value of the services Karen performed for those clients who discharged him and retained the Hubermans. However, the Hubermans do not cite, and we are unaware of, any apposite case holding that a trial court, in determining the reasonable value of a discharged attorney's services, cannot consider and include as a factor certain work performed for the "discharging" clients if that work also benefited clients who did not discharge the attorney. We are persuaded a trial court may, in its discretion, consider all work performed for the benefit of clients who later discharge an attorney, even though that work may also have benefited other clients who did not discharge the attorney. As a corollary to that conclusion, a trial court is not required to reduce the amount of its Fracasse reasonable value determination by the amount of any compensation an attorney receives from those clients who did not discharge the attorney.
See, e.g., Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, cited by the Hubermans, which is factually inapposite. Unlike this case, Akins involved various causes of action, some of which did not allow recovery of statutory attorney fees. (Id. at p. 1133.) Nevertheless, Akins noted that when the issues in those causes of action were so interrelated that it would be impossible to separate them for attorney fee purposes, allocation of attorney fees among the causes of action is not required. (Ibid.) "Such fees need not be apportioned when incurred for representation of an issue common to both a cause of action for which fees are permitted and one for which they are not. All expenses incurred on the common issues qualify for an award. [Citation.]" (Ibid.) Therefore, rather than arguably supporting the Hubermans' argument, Akins, albeit factually inapposite, appears to support the judgment in this case.
In this case, Karen admitted at trial that the "vast majority" of the hours for which he sought compensation "were for tasks or activities that [he] did on behalf of the group as a whole." Karen explained that "in this particular case and in most mass actions like this, the work is for the benefit of the group." He testified the majority of the hours for which he sought compensation was for work that benefited the group as a whole. To the extent he performed work uniquely for the benefit of those clients who did not later discharge him, Karen testified he tried to eliminate time attributable to that work. Based on this record, we cannot conclude the trial court abused its discretion by implicitly considering, and crediting Karen with, common work he performed for both clients who later discharged him and those who did not discharge him, and the court did not abuse its discretion by not reducing the amount of Karen's fee award by the amount of compensation he received from those clients who did not discharge him. (Cf. Fed-Mart Corp. v. Pell Enterprises, Inc. (1980) 111 Cal.App.3d 215, 227 [no apportionment of attorney fees required where claims were inextricably intertwined and "it would be impracticable, if not impossible, to separate the multitude of conjoined activities into compensable or noncompensable time units."].) Furthermore, contrary to the Hubermans' assertion, the trial court was not required to apportion that common work among Karen's clients in determining the reasonable value of the services Karen performed for those clients who discharged him.
The trial court's failure to deduct the amount of contingency fees Karen collected from those clients who did not discharge him did not result in Karen's receipt of "double" recovery of attorney fees. Karen received only those attorney fees based on the reasonable value of the work he performed as determined by the trial court in its discretion.
The Hubermans also assert the trial court erred by considering certain work performed by Karen solely for clients who did not discharge him. However, the record does not support that assertion. Karen testified he tried to eliminate from his claim time spent on matters unique to those clients who did not discharge him. Absent anything in the record showing otherwise, we therefore presume the trial court accepted that testimony and implicitly found Karen's claim did not include time, or request compensation, for unique work performed solely for clients who did not discharge him. Accordingly, the trial court awarded Karen compensation only for work performed for the benefit of those clients who later discharged him and retained the Hubermans.
To the extent the Hubermans argue the work performed by Karen in the Noebel class action was unnecessary to the Mayne case or did not benefit the Mayne claimants, the record supports the implicit finding by the trial court that the action filed by Karen was for the benefit of the entire group and, even though ultimately unsuccessful, was compensable under Fracasse/Spires. "[L]itigation may involve a series of attacks on an opponent's case. The final ground of resolution may become clear only after a series of unsuccessful attacks. Compensation is ordinarily warranted even for those unsuccessful attacks, to the extent that those attacks led to a successful claim." (Akins v. Enterprise Rent-A-Car Co., supra, 79 Cal.App.4th at p. 1133.) In any event, the record does not show the trial court necessarily considered Karen's work on the Noebel case in determining the reasonable value of the services he performed for those clients who later discharged him and retained the Hubermans.
The Hubermans also assert the trial court did not apply the proper standard in determining the reasonable value of Karen's legal services. They cite an excerpt from the reporter's transcript in which the court stated: "You can't use [the] quantum meruit approach in this case." However, the court presumably was referring to the fact that because in its determination the aggregate quantum meruit value of the services provided by both Karen and the Hubermans exceeded the amount of the one-third contingency fee, under Spires apportionment of the contingency fee was required and therefore Karen could not obtain the full quantum meruit value of his services. In so doing, we conclude the trial court properly interpreted and applied the law under Fracasse/Spires to the circumstances in this case, which the court determined to involve the quantum meruit value of services provided by Karen and the Hubermans that, in the aggregate, exceeded the contingency fee amount of $736,500 and therefore required apportionment. There is nothing in the record showing the trial court did not require Karen to prove the reasonable value of his services. Rather, the record supports the inference that the court considered Karen's testimony and the extensive documents he submitted regarding the time he and his paralegals spent on work performed for the clients who later discharged him and then retained the Hubermans. The court implicitly found Karen persuasively proved the reasonable value of his services, but because that value, when combined with the reasonable value of the Hubermans' services, exceeded the one-third contingency fee, apportionment was required under Spires.
To the extent the Hubermans argue Spires is factually inapposite, we nevertheless adopt its general conclusion that apportionment of a contingency fee is required when the reasonable value of the services provided by a discharged attorney and the new attorney exceed the amount of the contingency fee. The irrelevant factual differences between Spires (e.g., second attorney did not have a fee agreement) and this case do not preclude the application of that general principle to the facts in this case. Furthermore, although Spires stated that apportionment of a contingency fee in such a case should be "in proportion to the time spent on the case by each [attorney]" (Spires, supra, 158 Cal.App.3d at p. 216), we believe the time spent should be only one of many factors in a trial court's discretionary determination of the appropriate apportionment of a contingency fee in a Fracasse/Spires case. (Cf. Padilla v. McClellan, supra, 93 Cal.App.4th at p. 1107 [listing factors to be considered in trial court's exercise of discretion in determining the reasonable value of an attorney's services].)
Likewise, the record does not support the Hubermans' assertion that the trial court did not consider the $100,000 advance payment Karen received prior to trial. In making its apportionment of the one-third contingency fee of $736,500, the trial court expressly noted that both Karen and the Hubermans "already had received $100,000.00 each" and therefore those $100,000 amounts were included in making its overall apportionment of the $736,500 fee. Accordingly, the trial court considered Karen's receipt of the $100,000 advance payment in making its determination.
Finally, the Hubermans assert the trial court did not consider the reasonable value of their services in applying Spires. However, as discussed above, the trial court implicitly considered the reasonable value of the services provided by both Karen and the Hubermans in determining the aggregate value exceeded the amount of the contingency fee and therefore apportionment was required. Although the trial court apparently did not expressly make any finding regarding the number of hours spent by the Hubermans in representing the clients who discharged Karen, the trial court stated: "I'm going to take it that as soon as the Huberman firm got involved in this case [their] full-time was spent on it. So whether it's 10 hours or 20 hours a day, full-time is full-time." Accordingly, contrary to the Hubermans' assertion, the record shows the trial court considered the time they worked for the clients who discharged Karen and implicitly concluded the reasonable value of those services, when combined with the reasonable value of Karen's services, exceeded the amount of the contingency fee and therefore required apportionment under Spires.
Because there is substantial evidence to support the trial court's finding that the reasonable value of the services performed by Karen and the Hubermans exceeded the amount of the $736,500 contingency fee, the trial court properly concluded apportionment of that fee was required under Spires. Based on the record in this case, we are not persuaded the trial court abused its discretion in apportioning the contingency fee as set forth in its statement of decision and judgment.
Because of our disposition of the Hubermans' contention, we need not address Karen's assertion that the Hubermans did not provide an adequate appellate record in support of their contention on appeal.
II
Section 2033.420 Award
The Hubermans contend the trial court abused its discretion by awarding Karen $10,000 in attorney fees and costs pursuant to section 2033.420.
A
Section 2033.420 (formerly § 2033, subd. (o)) "gives the trial court the discretion to award attorney fees against a party to whom the request [for admissions] was directed to pay the reasonable expenses included in making that proof if that party to whom the request was directed fails to admit the truth of the matter and the requesting party thereafter proves the truth of the matter." (Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, 736.) Section 2033.420 provides:
"(a) If a party fails to admit the genuineness of any document or the truth of any matter when requested to do so under this chapter, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney's fees.
"(b) The court shall make this order unless it finds any of the following: [¶] . . . [¶] (2) The admission sought was of no substantial importance; [¶] (3) The party failing to make the admission had reasonable ground to believe that that party would prevail on the matter. . . ." (Italics added.)
"The determination of whether a party is entitled to expenses under section [2033.420] is within the sound discretion of the trial court. 'On appeal, the trial court's decision will not be reversed unless the appellant demonstrates that the lower court abused its discretion.' [Citation.]" (Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 637, fn. 10.)
B
On or about November 3, Karen filed a motion pursuant to section 2033.420 for an award of $30,000 in attorney fees and costs against the Hubermans. He argued that at trial he proved many facts that had been the subject of pretrial requests for admissions directed to the Hubermans and not admitted. In support of his motion, he attached the declaration of his attorney, Alan E. Greenberg. Greenberg's declaration stated he was Karen's trial counsel and had served on the Hubermans a set of requests for admissions on August 20, 2005. The declaration attached copies of the requests for admissions and the Hubermans' original and supplemental responses to the requests. Greenberg's declaration stated: "[I]n both their original and supplemental responses, the Hubermans failed to admit many key facts that were not really in dispute in this case. Karen was forced to prove these facts at [trial]." The declaration set forth 27 of Karen's requests for admissions directed to the Hubermans and their responses thereto. The declaration set forth Karen's request for admission number 8: "While [Karen] was the attorney for the Claimants . . . and before certain Claimants retained [the Hubermans], [Karen] advanced or personally obligated himself to pay all litigation and arbitration costs for his clients . . . [who] later discharged him and retained [the Hubermans]." The declaration set forth the Hubermans' supplemental response to that request: "Objection. This request is unreasonably vague, ambiguous, overly broad, and burdensome as to the meaning of the terms 'advanced' and 'personally obligated himself to pay.' However, without waiving objections, [the Hubermans respond] as follows: [¶] [The Hubermans have] no personal knowledge with which to admit or deny Request for Admission No. 8, and therefore, must DENY." Greenberg's declaration then stated: "This request [sic] was proven to be true by Karen's trial testimony and his written retainer agreement (Joint Trial Exhibit '2'), which provided that he would advance the costs of the Mayne case." His declaration stated his reasonable hourly rate was $175.00 and his paralegals' hourly rate was $75.00. Greenberg concluded: "I have reviewed the facts that were proven as listed above and the record, and based on my experience in this case, it is my reasoned opinion that attorneys fees and costs of at least $30,000.00 were actually incurred by Karen due to work done by my firm in proving the facts listed above to be true."
On or about November 6, Karen filed a first amended motion for an award of $63,683.66 in attorney fees and costs against the Hubermans pursuant to section 2033.420. The amended motion and Greenberg's amended declaration were substantially the same as the original motion and declaration, except as amended to increase the award sought to include the costs of expert witnesses (i.e., $33,683.66). Greenberg's first amended declaration concluded: "I have reviewed the facts that were proven as listed above and the record, and based on my experience in this case, it is my reasoned opinion that attorneys fees of at least $30,000 were actually incurred by Karen due to work done by my firm in proving the facts listed above to be true. In addition, costs of suit, including but not limited to expert witness fees, of at least $33,683.66 were incurred by Karen due to work done by my firm in proving the facts listed above to be true. A memorandum of costs has been submitted in this case under separate cover breaking out these costs on an item-by-item basis."
On or about November 16, the Hubermans opposed Karen's section 2033.420 motion, arguing the admissions Karen sought were of no substantial importance. The Hubermans also argued Karen provided insufficient proof of the cost of proving the matters denied by them because Karen did not specify the time spent to prove those matters.
On or about November 22, Karen replied to the Hubermans' opposition, arguing his advancement of costs on behalf of the clients who later discharged him was "a factor that can be considered in the determination of the quantum meruit value of his services and it is clear that the Court did take this into account in this case."
On December 1, the trial court heard arguments of counsel on Karen's section 2033.420 motion. Karen's counsel argued the Hubermans unjustifiably denied many of Karen's requests for admissions, including his request regarding Karen's advancement of costs. The Hubermans' counsel asserted the issue was really Karen's cost of that proof at trial, arguing Karen submitted only a conclusory declaration of his counsel that primarily dealt with the cost of generally preparing for trial rather than of proving the facts denied by the Hubermans. The trial court stated:
"Mr. Kahn [the Hubermans' counsel], . . . don't you think it bothers me that you were propounded certain requests for admissions and you came up with these . . . obvious answers that just flew in the face of reality, you know, I mean, seriously, when you go through these requests. [¶] Let me go through a few of these. It's kind of, I don't know humorous or whatever, but kind of bothers me.
"Request[:] Did [Karen] advance or personally obligate himself to all litigation and arbitration cost[s]? [¶] [The Hubermans' response:] Have no personal knowledge. That's a ridiculous statement."
After reviewing a few more requests for admissions and the Hubermans' responses, the court stated: "[Every one] of these requests . . . are obviously known to the Hubermans . . . . [¶] Doesn't that kind of bother you, sir[?]" The trial court noted that in its statement of decision it found "Mr. Karen fronted the costs. Mr. Karen did all the discovery and it was not an easy discovery process." The court therefore found it had considered Karen's advancement of costs in reaching its decision. It noted Karen's advancement of costs and discovery effort were "very important to my decision." The court referred to the Hubermans' denials based on a lack of information as "a bunch of hogwash." The court noted it had reviewed and considered "everything that occurred in the case." Karen's counsel argued his preparation for trial would have been more streamlined had the Hubermans admitted the facts requested. He argued fewer exhibits would have been required and the trial would have been shortened. His attorney fee estimate for the costs of proving those facts denied by the Hubermans represented 60 percent of his fees, based on an estimate that his trial preparation and the trial would have been 60 percent more streamlined had the Hubermans admitted those facts.
The trial court found the Hubermans' denials of the requested admissions "were unreasonable" and caused Karen to incur costs to prove those facts at trial, but not to the extent of the costs sought by Karen. The court found: "I think that [the Hubermans' unreasonable denials] did cause [Karen] [to incur] reasonable expenses in making proof and including reasonable attorneys fees and I am going to make an award under CCP [section] 2033.420 in the amount of $10,000.00." The court noted that it exercised its discretion in determining $10,000 was the reasonable cost of that proof by Karen. The court stated its determination was based on the declarations submitted in support of Karen's motion, as well as its percipient knowledge obtained by sitting through the trial and listening to the witnesses testify.
On December 12, the trial court issued its written order awarding Karen $10,000 in attorney fees and costs against the Hubermans under section 2033.420.
C
The Hubermans primarily argue the trial court abused its discretion in awarding Karen section 2033.420 fees and costs of $10,000 because Karen submitted insufficient evidence of the cost of proving the facts denied by the Hubermans. Citing Garcia, the Hubermans argue an "accounting is required setting forth the time spent to 'prove' the matters denied" and conclusory statements of counsel are insufficient. However, not only do the Hubermans misread Garcia, but that case is factually inapposite and does not persuade us to conclude Karen's evidence is insufficient to support the trial court's section 2033.420 award. In Garcia, in support of the respondent's request for a section 2033.420 (then § 2033, subd. (o)) award, its counsel submitted a declaration "claim[ing] some $18,245.73 in 'attorneys fees, costs and other expenses associated with the trial of this case and proving those Requests for Admissions numbered 1 through 15,' all incurred after June 30, 1992, the date [respondent] propounded its request for admissions." (Garcia v. Hyster Co., supra, 28 Cal.App.4th at p. 736, italics added by Garcia.) The trial court awarded the full amount requested. (Ibid.) Garcia concluded that award should not have included any expenses incurred before July 30, 1992, when the appellant served its denial. (Ibid.) Furthermore, Garcia concluded that the respondent's award request included at least some expenses incurred on "issues . . . completely outside the scope of the request for admissions." (Id. at pp. 736-737.) Finally, Garcia stated:
"[T]he award was made based solely on the declarations of [respondent's] counsel, who failed to set out either his hourly fee or any accounting of time spent on the case. While the trial judge doubtless has the discretion to base an award on an informed opinion of ' "the value of professional services rendered" ' in his or her courtroom [citation], the record here shows that the court relied strictly on a conclusionary statement of counsel, and establishes that counsel's own assessment includes matters not properly the subject of a section [2033.420] sanction." (Garcia, at p. 737, italics added.)
Accordingly, Garcia concluded the trial court abused its discretion "in awarding [the respondent] everything it asked for." (Garcia, at p. 737.)
In this case, the declaration of Karen's counsel (Greenberg) set forth his hourly rate and his paralegals' hourly rate, as well as the estimated total attorney fees incurred in proving facts that the Hubermans unreasonably denied in response to requests for admissions. Therefore, unlike the declaration in Garcia, Greenberg's declaration was not conclusory. Garcia does not require a more specific accounting to support a section 2033.420 award. Furthermore, unlike in Garcia, the trial court in this case expressly stated that it had observed the testimony and other evidence presented at trial and was relying in part on its observations in determining the amount of the section 2033.420 award. Also, unlike in Garcia, the trial court in this case did not award the full amount sought by Karen. Rather, it awarded only $10,000 of the $63,683.66 amount sought by Karen. Because Garcia is inapposite to this case, it does not show the trial court abused its discretion in making its section 2033.420 award to Karen.
The Hubermans also argue the matters subject to Karen's request for admissions were of no substantial importance to the case and therefore cannot be the subject of a section 2033.420 award. However, we, like the trial court, conclude Karen's advancement of costs on behalf of his clients who later discharged him was a relevant factor in the trial court's determination of the reasonable value of Karen's legal services under Fracasse/Spires. The trial court reasonably considered Karen's advancement of costs to be of value to his clients, particularly in a contingency fee case that extended over a lengthy period of time (i.e., over four years). Therefore, the trial court reasonably considered that matter to be of "substantial importance" under section 2033.420, subdivision (b)(2).
Finally, citing section 2033.420, subdivision (b)(3), the Hubermans apparently argue the trial court abused its discretion in granting Karen's section 2033.420 motion because the Hubermans "had reasonable ground to believe they would prevail in the underlying matter." The Hubermans argue: "[G]iven the clear holding of [Fracasse], [the Hubermans] unquestionably had reasonable ground to believe they would prevail in the underlying matter because the law is clear that a discharged attorney is only entitled to the reasonable value of his services rendered prior to his discharge, and the only issue in [this case] was not whether . . . Karen performed legal services on behalf of his clients, but rather the reasonable value of those services." (Italics added.) In so arguing, the Hubermans misconstrue section 2033.420, subdivision (b)(3). The "matter" to which that subdivision refers is not "the underlying matter" or the general issues at trial, as the Hubermans apparently believe, but is, instead, the factual matter that was the subject of the request for admission. For example, the trial court found the Hubermans unreasonably denied Karen's request for admission that he had advanced or was obligated to pay all litigation and arbitration costs on behalf of his clients who later discharged him. Therefore, the trial court in effect found the Hubermans did not have a reasonable ground to believe they would prevail on the matter of whether Karen advanced or was obligated to pay those costs. The Hubermans' belief that they would prevail at trial in defending against Karen's claim for reasonable attorney fees is irrelevant to section 2033.420, subdivision (b)(3). We conclude the trial court did not abuse its discretion in awarding Karen $10,000 against the Hubermans pursuant to section 2033.420.
DISPOSITION
The judgment is affirmed. Karen is entitled to costs on appeal.
WE CONCUR: McCONNELL, P. J., HALLER, J.