Opinion
JOSEPH SPERO, Magistrate Judge.
I. INTRODUCTION
Following a jury trial, judgment was entered against Defendant Western Express, Inc. ("Western Express") in the amount of $336, 932.02 based on the jury's finding that Western Express breached its contract with Plaintiff Menlo Logistics, Inc. ("Menlo"). Menlo now brings a Motion for Prejudgment Interest and Attorneys' Fees ("the Attorneys' Fees Motion"), while Western Express brings a Motion for New Trial ("the New Trial Motion"). For the reasons stated below, the New Trial Motion is DENIED. The Attorneys' Fees Motion is GRANTED.
This Court has jurisdiction pursuant to 28 U.S.C. § 636(c), based on the consent of the parties.
II. BACKGROUND
A. The Underlying Events and Trial
This case involves a dispute that arose when a shipment of goods that was being transported by Western Express from one Hewlett Packard ("HP") facility to another, pursuant to a contract between Western Express and Menlo, was stolen. The driver, Jerrick Douglas, arrived at his destination after the scheduled delivery time on a Friday night. He was told he would have to wait until Monday morning to unload his truck. Douglas went to a truck stop to wait, but on Sunday evening the truck was stolen when Douglas left the truck running while he went inside to make a telephone call. Douglas told Menlo investigator Chris Zook that he had left the cab of the truck unlocked. Subsequently, however, he stated in a declaration that he believed the truck had been locked. HP filed a claim with Menlo for $336, 932.02 for the lost goods, which Menlo paid. Menlo, in turn, filed a claim for the same amount with Western Express. Western Express disputed the claim and this action followed.
In its complaint, Menlo asserted two claims for breach of contract and one claim for negligence against Western Express. The breach of contract claims were based on provisions of a 1999 Master Agreement between Menlo and Western Express and a 2002 Addendum to the Master Agreement. First, Menlo asserted that Western Express was contractually obligated to pay for the loss because the goods were stolen prior to delivery at a time when Western Express was in control of the goods. Second, Menlo asserted Western Express breached the contract because it did not maintain insurance that would have covered the losses that resulted from the theft of the goods, as required under the contract.
Menlo brought a summary judgment motion in which it asserted it was entitled to the damages sought in its complaint as a matter of law as to all three of its claims. Western Express opposed the motion, asserting that with respect to the first breach of contract claim, the goods were not stolen prior to delivery because the goods were delivered when the driver arrived at the HP facility on Friday night. Western Express also argued that it was not liable for the loss of the goods because under the contract, Western Express was not liable for losses that were due to Menlo or HP's "sole negligence." As to the second breach of contract claim, Western Express argued that the insurance provision of the contract had been waived and in addition, that performance was impossible. Western Express also challenged the authenticity of the 1999 Master Agreement. Finally, Western Express argued there was a fact question as to the negligence claim.
The Court denied Menlo's summary judgment motion but narrowed the issues to be decided at trial by holding as a matter of law that: 1) the goods were not delivered as the term "delivery" was used in the contract; and 2) the insurance provision was not waived. The Court found that the 1999 Master Agreement had been properly authenticated. The Court also held that fact questions remained as to whether: 1) the "sole negligence" provision applied; 2) performance of the insurance provision was impossible; and 3) Western Express was negligent. Prior to trial, Menlo voluntarily dismissed its negligence claim.
At the pretrial conference, the Court made a series of evidentiary rulings. Among other things, the Court ruled that a witness included on Western Express's witness list - Steve Buzell - would not be permitted to testify because he was not timely disclosed as required under Rule 26 of the Federal Rules of Civil Procedure. The Court also denied Western Express's motion in limine seeking exclusion of Chris Zook's report concerning the theft on the basis that it contained hearsay statements of the driver, Jerrick Douglas. The Court found that the Zook report was admissible as a business record and as a party admission.
At trial, Western Express raised the possibility of introducing testimony by Douglas that around the time Chris Zook interviewed him for his report, he told a Western Express employee, Clarence Easterday, that he had locked the truck. However, Western Express did not identify any applicable exception to the hearsay rule and did not formally seek to introduce the testimony. After final jury instructions were given, the jury was given a special verdict form addressing liability and damages for each of the two breach of contract claims. During deliberations, the jury asked whether the damages for the two claims would be "totaled cumulatively, " or rather, whether the jury should award total damages as to each breach of contract claim. The Court consulted with the parties and then answered the question by explaining that the damages for the two claims would not be totaled and that full damages should be entered as to each claim. The jury found in favor of Menlo on both claims and found that damages for each claim were $336, 932.02.
B. New Trial Motion
Western Express asserts that it should be granted a new trial under Rule 59 of the Federal Rules of Civil Procedure on three grounds. First, Western Express argues that the Court committed a series of legal errors, both at summary judgment and at trial. In particular, Western Express takes the position that the Court erred when it: 1) admitted the 1999 Master Agreement into evidence without adequate authentication; 2) ruled on summary judgment that there was no delivery of the goods at issue, as a matter of law, rather than submitting the issue to the jury; 3) admitted the investigative report of Menlo employee Chris Zook under the business record and admission against interest exceptions to the hearsay rule; 3) refused to allow Steve Buzell to testify as either an expert or percipient witness; 4) refused to allow driver Jerrick Douglas to testify that he told Western Express employee Clarence Easterday that he locked his truck.
Second, Western Express asserts that it should be granted a new trial because the jury's verdict as to its impossibility defense was against the clear weight of the evidence.
Third, Western Express argues that the verdict form was confusing, pointing to the jury's question about damages as an indication that the jury did not understand that the two contract claims represented alternative theories of liability.
C. Attorneys' Fees Motion
Menlo seeks to recover attorneys' fees under the Master Agreement, which provides that "the prevailing party shall be entitled to recover from the other party reasonable expenses, attorneys fees, and costs." Master Agreement, Paragraph 24. In addition, Menlo seeks prejudgment interest pursuant to California Civil Code § 3287(a), which provides that "[e]very person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover is vested in him upon a particular day, is entitled to recover interest thereon from that day."
In the Attorneys' Fees Motion, Menlo also requested $959.00 in costs. It made the same request in its Bill of Costs. On December 29, 2005, the Clerk's Office taxed costs in the amount of $839.50. Because Menlo has not challenged that determination, the Court need not address Menlo's request for costs, which is now moot.
Western Express responds that Menlo should not be considered a prevailing party to the extent that Western Express may prevail on its New Trial Motion. Similarly, Western Express asserts that damages are not "certain" for the purpose of awarding prejudgment interest because of the issues raised in the New Trial Motion. Western Express further argues that even if Menlo is entitled to attorneys' fees, the fees sought are not reasonable.
III. ANALYSIS
A. New Trial Motion
1. Legal Standard
Rule 59 of the Federal Rules of Civil Procedure provides that "[a] new trial may be granted to all or any of the parties and on all or part of the issues (1) in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States." Courts have held that under Rule 59 a new trial may be ordered "even though the verdict is supported by substantial evidence, if the verdict is contrary to the clear weight of the evidence, or is based upon evidence which is false, or to prevent, in the sound discretion of the trial court, a miscarriage of justice.'" United States v. 4.0 Acres of Land , 175 F.3d 1133, 1139 (9th Cir. 1999) (quoting Oltz v. St. Peter's Cmty. Hosp. , 861 F.2d 1440, 1452 (9th Cir. 1988)). A new trial also should be granted under Rule 59 when an erroneous evidentiary ruling "substantially prejudiced" a party. Ruvalcaba v. City of Los Angeles , 64 F.3d 1323, 1328 (9th Cir. 1995). Finally, a new trial may be warranted where it is evident from the jury verdict that the jury was mistaken or confused about the applicable law. See Cheney v. Moler , 285 F.2d 116, 117 (10th Cir. 1960).
2. Verdict Against Weight of Evidence
Western Express asserts that the verdict was against the clear weight of the evidence to the extent the jury found that it was not impossible for Western Express to obtain the insurance required under the contract. The Court disagrees.
At trial, Western Express presented evidence that it was unable to procure insurance of the kind required under the contract. While the jury could reasonably have drawn an inference based on this evidence that such insurance was impossible for anyone to obtain, its failure to draw that inference also was reasonable. Because Western Express presented no evidence of unavailability beyond its own experience, the jury's finding was not against the clear weight of the evidence.
3. Evidentiary and other Legal Rulings
As set forth above, Western Express challenges a number of rulings by the Court, including rulings in its summary judgment order, at the pretrial conference, and at trial. The Court stated the reasons for each one of these rulings, either on the record or in a written order. Western Express has not presented any arguments that persuade the Court these rulings were erroneous. Therefore, none of these alleged legal errors warrants a new trial.
4. Jury Confusion
Western Express asserts that the jury's single question about damages on the two breach of contract claims shows it was so confused about the verdict that a new trial should be ordered. The Court rejects this assertion. The jury's question was a straightforward one, as was the answer that was given in response, with the approval of both parties. There were no further questions and nothing in the jury's responses to the special verdict form suggest they were confused. Therefore, the New Trial Motion is DENIED.
B. Attorneys' Fees Motion
1. Prejudgment Interest
A motion to alter a judgment to include prejudgment interest is governed by Rule 59(e) of the Federal Rules of Civil Procedure. McCalla v. Royal Maccabbees Life Ins. Co. , 369 F.3d 1128, 1128 (9th Cir. 2004). Rule 59(e) provides that "[a]ny motion to alter or amend a judgment shall be filed no later than 10 days after entry of the judgment." In diversity actions, prejudgment interest is governed by state law. AT&T v. United Computer Sys., Inc. , 98 F.3d 1206, 1209 (9th Cir. 1996).
California law provides for both mandatory and discretionary prejudgment interest. See McCalla , 369 F.3d at 1128 (citing California Civil Code § 3287). Mandatory prejudgment interest is governed by subsection (a) of California Civil Code § 3287, which provides, in relevant part, as follows:
Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt.
Cal. Civ. Code § 3287(a). Discretionary prejudgment interest is governed by subsection (b), which provides:
Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.
Cal. Civ. Code § 3687(b). Mandatory prejudgment interest is awarded where the defendant, prior to trial, actual knew the amount owed or could have computed the amount from "reasonably available information." Children's Hosp. and Med. Ctr. v. Belshe , 97 Cal.App. 4th 740, 774 (2002). Discretionary interest, on the other hand, may be awarded where the amount of damages "depends upon a judicial determination based upon conflicting evidence and it is not ascertainable from truthful data supplied by the claimant to his debtor." Id .
Here, Western Express knew the amount of the loss before this action was filed. Prior to filing the action (or even paying HP's claim), Menlo had presented Western Express with a claim for $336, 932.02 - the amount Menlo paid HP for the loss and the amount of Menlo's claim with Western Express. See Declaration of Joseph W. Schuler in Support of Plaintiff's Motion for Summary Judgment or Summary Adjudication, Ex. 3 (HP Claim) (copy of check from Menlo to HP) & Ex. 4 (Menlo claim). Menlo also presented evidence in this action that its damages were incurred on October 20, 2004, when it issued a check to HP for the lost shipment. Id. , Ex. 5 (copy of check from Menlo to HP). This date, if not actually known to Western Express before this action was filed, could easily have been ascertained. The amount owed, therefore, was either known or could have been calculated from reasonably available information. As such, Menlo is entitled to a mandatory award of interest. Further, Western Express does not dispute that the applicable rate of prejudgment interest is 10%, as set forth in Cal. Civ. Code § 3289.
The Court rejects Western Express's reliance on United States Sec. and Exch. Comm'n v. Henke , 275 F.Supp.2d 1075, 1082 (N.D. Cal. 2003) in support of its assertion that prejudgment interest should be denied based on considerations of fairness. That case is inapposite because it involves a discretionary award of prejudgment interest under federal law.
Accordingly, the Court awards Menlo $36, 185.52 in prejudgment interest.
This amount is based on a rate of 10% per annum on damages of $336, 932.02 - or, $92.31 per day - for the period October 20, 2004, to the date judgment was entered, November 16, 2005.
2. Attorneys' Fees
In diversity cases, if "state law does not run counter to a valid federal statute or rule of court, and usually it will not, state law denying the right to attorney's fees or giving a right thereto, which reflects a substantial policy of the state, should be followed." Alyeska Pipeline Servs. Co. v. Wilderness Soc'y , 421 U.S. 240, 259 n. 31 (1975). California law allows for the recovery of contractual attorneys' fees as follows:
In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce the contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs.
Cal. Civ. Code § 1717(a). Western Express does not dispute that under the contract the prevailing party is entitled to attorneys' fees. Further, having denied Western Express's New Trial Motion, the Court finds that Menlo is the prevailing party. Therefore, Menlo is entitled to reasonable attorneys' fees.
Reasonable attorneys' fees are calculated using the lodestar approach, in which the court multiplies the number of hours billed by the party's attorneys by a reasonable hourly rate. See Jordan v. Multnomah County , 815 F.2d 1258, 1264 n. 11 (9th Cir. 1987). In calculating the lodestar amount, the Court considers any of the factors listed in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975), cert. denied 425 U.S. 951 (1976), that are relevant. To the extent that the Kerr factors are not addressed in the calculation of the lodestar, they may be considered in determining whether the fee award should be adjusted upward or downward, once the lodestar has been calculated. Chalmers , 796 F.2d at 1212. However, there is a strong presumption that the lodestar figure represents a reasonable fee. Jordan , 815 F.2d at 1262.
In Kerr , which was decided before the lodestar approach was adopted by the Supreme Court as the starting point for determining reasonable fees in Hensley v. Eckerhart , 461 U.S. 424, 433 (1983), the Ninth Circuit adopted the 12-factor test articulated in Johnson v. Georgia Highway Express, Inc. , 488 F.2d 714 (5th Cir. 1974). This analysis looked to the following factors for determining reasonable fees: (1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation, and ability of the attorneys, (10) the 'undesirability' of the case, (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases. 526 F.2d at 70.
"To inform and assist the court in the exercise of its discretion, '"[t]he fee applicant has the burden of producing satisfactory evidence, in addition to the affidavits of its counsel, that the requested rates are in line with those prevailing in the community for similar services of lawyers of reasonably comparable skill and reputation.'" Schwarz v. Sec'y of Health & Human Servs. , 73 F.3d 895, 908 (9th Cir. 1995) (quoting Jordan , 815 F.2d at 1263 (9th Cir.1987)). Generally, parties seeking fees provide affidavits of practitioners from the same forum with similar experience to establish the reasonableness of the hourly rate sought. See, e.g., Mendenhall v. Nat'l Transp. Safety Bd. , 213 F.3d 464, 471 (9th Cir. 2000) (holding that affidavits of four practitioners in the community were sufficient to establish reasonable rate of $250.00 per hour even though attorney had only billed $150.00 per hour). Decisions by other courts regarding the reasonableness of the rate sought may also provide evidence to support a finding of reasonableness. See Widrig v. Apfel , 140 F.3d 1207, 1210 (9th Cir. 1998) (holding that rate set by district court based, in part, on rate awarded to same attorney in another case, was reasonable).
Menlo seeks attorneys' fees in the amount of $160, 347.50. That amount includes fees incurred by Menlo's current counsel, Folger, Levin & Kahn ("FLK") in the amount of $152, 450.00 and fees incurred by its former counsel, Lanahan & Reilley, in the amount of $7, 897.50. According to Menlo, this amount does not include $90, 000.00 in fees that were written off as an accommodation to Menlo. See Declaration of Douglas W. Sullivan in Support of Menlo's Motion for Attorneys' Fees ("Sullivan Decl."), ¶ 12. In addition, fees incurred in connection with transferring the case from Lanahan & Reilley to FLK and fees incurred in amending the complaint to drop the negligence claim were excluded. Id ., ¶ 13.
With respect to the fees billed by FLK, the vast majority arise from hours spent by lead counsel Amy Kashiwabara, for whom Menlo seeks fees for a total of 427.10 hours at a rate of $250.00/hour. See id. , ¶ 7. Additional fees were billed by two partners who supervised Ms. Kashiwabara.'s work, Douglas Sullivan and J. Daniel Sharp. Id . Sullivan billed 22.10 hours at a rate of $550.00/hour and Sharp billed 37.30 hours at a rate of $475.00/hour. Finally, fees are sought for time billed by legal assistant Vanessa Mendoza, who billed 90.30 hours at a rate of $175.00/hour.
Western Express challenges the fees sought by Menlo as unreasonable on several grounds. First, it asserts that Menlo has failed to present adequate evidence that any of rates sought are reasonable. Further, Western Express asserts that the rates sought by Sullivan and Mendoza are not reasonable. Second, Western Express asserts that the time billed by Sharp for attending the trial was unnecessary because Sharp did not actively participate except for a brief voir dire of the jury and cross-examination of one witness. Third, Western Express asserts that the time billed for its summary judgment motion was excessive, given that Menlo ultimately lost the motion. Finally, Western Express argues that the $90, 000.00 in fees that were not billed to Menlo should not be considered as Menlo has provided no evidence as to how this time was spent.
Having carefully reviewed the time sheets provided by Menlo, the Court concludes that the hours for which fees are sought by Menlo are reasonable. First, the Court finds that the staffing of the case was reasonable and likely reduced the fees incurred. In particular, the bulk of the hours were billed by the least expensive attorney at FLK, Kashiwabara, while the more senior (and more expensive) attorneys exercised a much more limited role. It was entirely reasonable for Sharp to attend the trial in order to assist and advise Kashiwabara if necessary, and the Court declines to second-guess that decision. Similarly, it was reasonable for FLK's litigation assistant to attend the trial. The fact that Western Express only observed Mendoza hand a document or two to counsel is not a sufficient basis to exclude these fees, given the importance of ensuring the trial ran smoothly, with maximum efficiency as to the time of the jury, the Court and the parties. The Court also rejects the assertion that the time billed in connection with the summary judgment motion was unreasonable. A number of significant legal issues were resolved on summary judgment (many in Menlo's favor), thereby reducing the issues to be addressed at trial. Therefore, these hours were reasonably incurred.
The Court further finds that the rates sought by Menlo are reasonable. Menlo has provided a declaration by a partner of FLK stating that the rates charged are normal (or reduced) hourly rates, are within the range charged by comparable firms, and identifying specific cases in which other courts have approved FLK's rates. See Sullivan Decl., ¶ 10. The Court also finds FLK's rates to be reasonable in light of the fact that FLK wrote off over $90, 000.00 in fees in the case. The fact that Menlo did not provide an itemization of those fees does not persuade the Court that this reduction is not relevant to its determination of the reasonableness of the rates sought. Finally, the Court notes that FLK significantly reduced the normal rate billed for Kashiwabara's time, from $310.00/hour to $250.00/hour. Id ., ¶ 4. Therefore, the Court concludes that the rates sought by Menlo are reasonable.
Accordingly, the Court awards the attorneys' fees in the amount of $160, 347.50.
IV. CONCLUSION
For the reasons stated above, Western Express's New Trial Motion is DENIED. Menlo's Attorneys' Fees Motion is GRANTED. The judgment shall be amended to include an award of prejudgment interest in the amount of $36, 185.52 and attorneys' fees in the amount of $160, 347.50. Menlo shall prepare a proposed amended judgment consistent with this opinion to be lodged with the Court.
IT IS SO ORDERED.