Fee Clause Was Broad, But Lower Court Correctly Reduced Paralegal Hourly Rates—Finding $330 Per Hour Too High.
Royalty Alliance, Inc. v. Tarsadia Hotels, Case Nos. D062537/D063402 (4th Dist., Div. 1 May 29, 2014) (unpublished) was a case where plaintiffs lost summary judgment motions challenging a developer’s retention of purchase deposits under various theories, including breach of contract/invalid liquidated damages/state securities theories with a broadly worded fees clause in the germane purchase agreements (fee clause applied “in any suit by either party against the other arising out of this contract”). Then, the lower court awarded prevailing defendants $1,146,682 (out of requested $1,171,682) in fees, reducing only hourly paralegal rates of $330 as too high.
Plaintiffs’ appeal did not result in anything different.
Civil Code section 1717 justifies a fee award because defendants defeated an argument that the contract was invalid and unenforceable. (Yuba Cypress Housing Partners, Ltd. v. Area Developers, 98 Cal.App.4th 1077, 1082-1084 (2002).) Beyond that, the “arising out of” language in the fees was broad enough to encompass both contractual and tort (securities) claims. (Xuereb v. Marcus & Millichap, Inc., 3 Cal.App.4th 1338, 1340, 1344 (1992).) Finally, the fees were reasonable based on the substantiation and plaintiffs’ failure to meet its burden to challenge specific items once defendants made a prima facie showing the requested amount was reasonable. (Premier Medical Mgt. Systems, Inc. v. CIGA, 163 Cal.App.4th 550, 558, 564 (2008).)