Nicole Nagel et al vs The Westen-Lawson Trust et al

Case Number

15CV01178

Case Type

Hearing Date / Time

Fri, 01/26/2024 - 10:00

Nature of Proceedings

Motion for Attorney Fees

Tentative Ruling

For the below reasons, plaintiff Nicole Nagel’s motion for post-judgment attorney fees is granted in her favor and against all defendants, jointly and severally, in the amount of $287,355.95. $222,142.50 payable to Valle Makoff, LLP, $42,723.45 payable to Rincon Venture Law Group, and $22,490.00 payable to Verus Law Group.

Unless otherwise mutually agreed, or further order of the court, payment for fees and costs is to be made no later than March 15, 2024.

Background:

This action arises out of a dispute over alleged defects in a home in Los Angeles that plaintiffs Nicole Nagel and ESY Investments, LLC, purchased from defendants Tracy Westen and Linda Lawson in June 2011. The parties arbitrated the dispute, and, on August 5, 2013, plaintiffs were awarded $4.595 million in damages, contractual attorney fees and costs. On February 21, 2014, the Superior Court of Los Angeles County confirmed the award.

Plaintiffs brought this action against defendants Tracy Westen and Linda Lawson; Westen Family Group, LLC; Derek Westen, individually and as trustee of the Westen Family Trust; and Peter K. Westen, individually and as trustee of the Westen 2010 Trust, for recovery of fraudulent transfers, conspiracy to commit fraudulent transfers, and aiding and abetting fraudulent transfers.

Plaintiffs Nicole Nagel (“Nagel”) and ESY Investments, LLC (“ESY”), filed the action in the Los Angeles Superior Court on October 22, 2014. On April 7, 2015, that court granted a motion to change venue and ordered the case transferred to this court.

As alleged in their First Amended Complaint (“FAC”): By the time of the arbitration award, Tracy Westen and Linda Lawson (“judgment debtors”) had absconded to the “debtor-friendly” state of Texas and engaged in asset protection and exemption planning to thwart plaintiffs’ collection efforts. (FAC ¶ 22.) The actions include restructuring defendant Westen Family Group, LLC (“WFG”), with the advice and coordination of defendants Derek Westen and Peter K. Westen; converting the California LLC into a Nevada LLC; and making changes to the operating agreement. Tracy, Derek, and Peter Westen are brothers, are all attorneys, and each is a manager of WFG. Defendants coordinated with “asset protection” lawyers in both Nevada and Texas. WFG holds for the benefit of the Westen brothers a variety of real estate in Santa Barbara, California; Las Vegas, Nevada; and Phoenix, Arizona. Tracy, Derek and Peter Westen effected the conversion of the LLC to a Nevada LLC with the principal purpose of hindering, delaying and defrauding plaintiffs in efforts to charge and foreclose under applicable California law the interest of judgment debtors. (FAC ¶¶ 28-33.) Defendants engaged in the fraudulent asset protection transfers by purchasing with the non-exempt proceeds of the Moss House an ostensibly exempt homestead residence in Texas and purchasing and transferring existing annuities intended to be held as entirely exempt under Texas law from execution, as opposed to California law which limits the exemption of annuities. (FAC ¶ 47.)

The causes of action in the FAC are: 1) to set aside fraudulent transfer of assets (per the caption of the cause of action, against WFG and Does only, but, in paragraph 47, plaintiffs allege judgment debtors’ fraudulent asset protection transfers); 2) conspiracy to fraudulently transfer assets; 3) aiding and abetting the fraudulent transfer of assets; and 4) imposition of constructive trust over the proceeds from the sale of the Moss House. Judgment debtors are sued individually and as trustees of the Westen and Lawson Trust. Derek Westen is sued individually and as trustee of the 1999 Westen Family Trust. Peter Westen is sued individually and a trustee of the Westen 2010 Trust. WFG is also a defendant.

On January 13, 2017, judgment debtors filed a petition for chapter 7 bankruptcy in the Eastern District of Texas. On September 18, 2017, the Bankruptcy Court issued its order lifting the automatic stay to permit plaintiffs to proceed with this action and pursue all claims against the judgment debtors in this action.

On May 14, 2018, plaintiffs filed a supplemental complaint alleging additional transfers, transactions, and related bad faith conduct with the intent to hinder, delay, and defraud plaintiffs as judgment creditors.

Peter Westen served a Code of Civil Procedure, section 998 Offer to Compromise, in the amount of $100,000.00 on July 23, 2018. The offer was not accepted.

Following a jury trial, plaintiffs were awarded $2,000,000.00 from WFG, $50,000.00 from Derek Westen, and $50,000.00 from Peter Westen.

On August 4, 2023, a hearing took place regarding attorney fees and costs. The court took the matter under submission and, on September 7, 2023, found plaintiffs were the prevailing parties and awarded fees and costs.

Plaintiffs now seek additional post-judgment attorneys’ fees, for the period of April 16, 2003, through September 13, 2023, related to enforcing the judgment.

Defendants WFG and Derek Westen oppose the motion. Defendant Peter Westen filed a joinder to opposition.

Analysis:

Plaintiffs seek additional post-judgment attorneys’ fees in the amount of $287,355.95 for the period of April 16, 2023 through October 13, 2023 related to enforcing the judgment. The fees are claimed to have been incurred by: (1) Valle Makoff, LLP in the amount of $222,142.50; (2) Rincon Venture Law Group in the amount of $42,723.45; and (3) Verus Law Group in the amount of $22,490.00.

Defendants oppose the motion arguing that plaintiffs’ enforcement efforts have done nothing to enhance collection because defendants have done everything possible to pay down the judgment, that Code of Civil Procedure section 685.040 does not apply to the enforcement fees sought because the underlying judgment has been supplanted by the judgment in this action, and the fees were not reasonably or necessarily incurred. Defendants also argue that if the court awards fees, it should do so only against WFG because Peter Westen and Derek Westen have both fully satisfied their obligations under the judgment. Finally, defendants challenge the time entries and containing block-billing.

In reply, plaintiffs argue that Code of Civil Procedure section 685.040 is applicable to this action, that the fees were incurred in connection with enforcing the judgment, and that defendants have not paid off the judgment.

Code of Civil Procedure section 685.040 provides: “The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorney’s fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law. Attorney’s fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney’s fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.”

The court has previously determined, and the parties all previously acknowledged, that Code of Civil Procedure section 685.040 is applicable to this action.

“[Code of Civil Procedure section 685.040] imposes just “ ‘two requirements before a motion for an award of postjudgment attorney fees may be awarded as costs: (1) the fees must have been incurred to ‘enforce’ a judgment; and (2) the underlying judgment had to include an award for attorney fees pursuant to Code of Civil Procedure section 1033.5, subdivision (a)(10)(A)....’ ” [Citation.]” (Cardinale v. Miller (2014) 222 Cal.App.4th 1020, 1025 (Cardinale).) “While in the usual scheme of things the target of a fee motion under section 685.040 is presumably the original judgment debtor, the Legislature did not so restrict the provision’s scope. Rather, the statute by its terms is broad enough to encompass fees expended to enforce a judgment against third parties who conspired with the judgment debtor to evade its enforcement.” (Ibid.)

Cardinale is on point. The court, in a case containing many similarities to the present case, makes clear that defendants, as coconspirators, have adopted the torts of the other coconspirators and incur liability equally with them, including liability for contractual and statutory attorney fees.

Here, both the original arbitration award, that was the basis of the underlying action, and the present case, resulted in judgments that met the requirements of including an award for attorneys’ fees. The actions taken by plaintiff’s counsel were all, ultimately, aimed at enforcing both the original arbitration award and then the judgment in the present case. Plaintiffs are entitled to recover attorney fees pursuant to section 685.040.

With respect to defendants’ argument that the enforcement efforts were unnecessary: Defendants’ own evidence shows that the judgment was not paid prior to the enforcement efforts. Derek Westen declares: “[O]n October 13, 2023. Concurrently with the closing, as promised, WFG disbursed to plaintiffs, directly out of escrow, $4,732,469.55 to satisfy 100% of the entire award of attorneys’ fees and costs under the judgment. WFG made that payment a full 10 weeks before the Court-ordered deadline of December 29, 2023, to do so. Concurrently WFG also disbursed to plaintiffs directly out of escrow the remaining net cash from closing, $284,884.16.” (Derek Westen Dec., ¶ 8.) As noted above, plaintiff is seeking fees for the period of April 16, 2003, through September 13, 2023. Therefore, all of the fees were incurred prior to receiving the amounts stated. Given the facts of this case, plaintiffs’ counsel would not have been properly representing their clients had they not engaged in collection efforts, including the levy on defendants bank accounts. (Wisnia Reply Dec., ¶ 2 & Exh. A.) The court finds that the collection efforts were reasonable and necessary.

“[T]he fee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.] The reasonable hourly rate is that prevailing in the community for similar work. [Citation.] The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. [Citation.] Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. [Citation.].” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)

“[T]he verified time statements of the attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous.” (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.)

“[T]rial courts must carefully review attorney documentation of hours expended” in assessing reasonable and necessary attorney fees. (Ketchum v. Moses (2001) 24 Cal.4h 1122, 1132.) “The ‘ “experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong.” ’ ” (Ibid.)

“ ‘[A] reasonable hourly rate is the product of a multiplicity of factors .... the level of skill necessary, time limitations, the amount to be obtained in the litigation, the attorney's reputation, and the undesirability of the case.’ ” (Margolin v. Regional Planning Com. (1982) 134 Cal.App.3d 999, 1003–1004.)

“[T]he [party] ... seeking fees and costs ‘ “bear[s] the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.” [Citation.]’” (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1320.) “‘To that end, the court may require [a] defendant[ ] to produce records sufficient to provide “‘a proper basis for determining how much time was spent on particular claims.’” [Citation.]’” (Ibid.) “The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended. [Citation.]” (Ibid.)

“A trial court may not rubber stamp a request for attorney fees, but must determine the number of hours reasonably expended.” (Donahue v. Donahue (2010) 182 Cal.App.4th 259, 271.)

As noted above, Valle Makoff LLP seeks attorneys’ fees in the amount of $22,142.50. Nagel was charged between $165.00 per hour and $750.00 per hour depending on who was performing the work. The rates are comparable to other attorneys with similar experience and skill. Based on the qualifications and success of the attorneys, the court finds, as it did previously, the hourly rates reasonable.

Rincon Venture Law Group seeks attorneys’ fees in the amount of $42,723.45. Nagel was charged rates that ranged from $250.00 per hour to $590.00 per hour. The rates are comparable to other attorneys with similar experience and skill. Based on the qualifications and success of the attorneys, the court finds, as it did previously, the hourly rates reasonable.

Verus Law Group seeks attorneys’ fees in the amount of $22,490.00. Nagel was charged $325.00 per hour. The rate, based on the attorney’s experience and ability, is below market value for other attorneys with her experience and skill. The court finds the hourly rate reasonable.

Other than their blanket arguments regarding the collection efforts being unnecessary, as discussed above, defendants do not point to any individual time entry as listing a task that was unnecessary. Further, they do not argue that an unreasonable amount of time was spent on any particular task. Rather, defendants argue that plaintiffs have failed to show the amount of fees sought is reasonable and necessary because the invoices include some block billing. Defendants provide five examples of entries for the Valle Makoff firm and one example of an entry from Rincon Venture Law Group they claim constitutes improper block billing. They give no examples for Verus Law Group.

“[B]lock billing is not objectionable ‘per se,’ though it certainly does increase the risk that the trial court, in a reasonable exercise of its discretion, will discount a fee request. (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1325.) Block billing is particularly problematic in cases where there is a need to separate out work that qualifies for compensation . . . from work that does not.” (Jamamillo v. County of Orange (2011) 200 Cal.App.4th 811, 830.)

Here, there is no need to separate out work that qualifies for compensation and work that does not. The work is all related to enforcement and is recoverable. The invoices contain almost no redactions and describe the work performed with adequate specificity. None of the entries hinder the ability of the court to assess whether the time claimed was reasonable and necessary.

The court finds that the work performed was reasonable and necessary, and plaintiffs have met their burden of establishing entitlement to all of the requested attorney fees.