A Stuart Rubin et al vs Preferred Bank

Case Number

21CV03982

Case Type

Hearing Date / Time

Wed, 07/30/2025 - 10:00

Nature of Proceedings

Motion: Attorney Fees

Tentative Ruling

RULING

For the reasons set forth below, Preferred Bank’s motion for attorneys’ fees is granted as follows:

1. Attorneys’ fees are granted in favor of Preferred Bank, and against A. Stuart Rubin and Annette Rubin, in the amount of $949,486.78, to be paid to the attorneys for Preferred Bank.
2. The motion for costs is denied without prejudice. To the extent that Preferred Bank seeks to recover its claimed costs, it is directed to proceed by way of a memorandum of costs.

Background

This action was commenced on October 6, 2021, by the filing of the complaint by plaintiffs A. Stuart Rubin (Stuart) and Annette Rubin (Annette) against defendant Preferred Bank (Preferred) asserting 11 causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) estoppel; (4) slander of title; (5) interference with contractual relationships; (6) interference with prospective economic advantage; (7) unfair business practices; (8) unjust enrichment; (9) declaratory relief; (10) breach of fiduciary duty; and (11) constructive fraud.

As alleged in plaintiffs’ complaint:

Plaintiff Stuart Rubin (Rubin) is a real estate investor and developer. (Compl., ¶ 24.) For approximately 30 years, Rubin and his various entities have had long term banking relationships with several banks, including defendant Preferred. (Compl., ¶¶ 24-26.) Rubin and his wife, plaintiff Annette Rubin (A. Rubin), (collectively, the Rubins) formed a close and confidential relationship with Preferred and its President and Chief Executive Officer, Wellington Chen. (Compl., ¶ 27.) Business was not done by formal applications, but were discussed in a meeting or on the phone or by text and Preferred would send documents for the loan as discussed. (Ibid.) Preferred’s standard practice was to provide Rubin and his related entities with credit lines on an unsecured, interest-only basis, and to regularly renew those lines. (Compl., ¶ 28.)

On August 21, 2017, Preferred insisted that Rubin and his entities convert the unsecured credit lines to a jumbo loan of $12,750,000 (the Loan or Loan No. 209465) to be supported by collateral. (Compl., ¶ 29 & exhibits 1, 2.) The collateral for the Loan included (1) a second deed of trust on the residence at 715 N. Alpine Drive, Beverly Hills (the Beverly Hills Property), (2) a third deed of trust on the Rubins’ home at 4347 Marina Drive, Santa Barbara (the Santa Barbara Property), and (3) a second trust deed of trust on property located at 1604 Sunset Plaza Drive, Los Angeles (the Sunset Property) owned by plaintiff 1604 Sunset Plaza, LLC (Sunset). (Compl., ¶¶ 17, 30 & exhibits 3-5.) Rubin is the manager of Sunset. (Compl., ¶ 17.)

In April 2019, Preferred increased the principal of the Loan by approximately $4,125,870 to $16,875,868.57, paying off four other loans. (Compl., ¶ 31 & exhibit 6.) The Loan was guaranteed by Sunset, the Stuart and Annette Rubin Family Trust dated 11/4/2003 (Family Trust), and the Stuart Rubin Children’s Trust dated 12/21/2001 (Children’s Trust). (Compl., ¶¶ 16, 18, 32 & exhibits 7-9.)

In December 2019, Rubin had lunch with Chen and discussed restructuring the Loan’s debt service. (Compl., ¶ 33.) Chen reiterated that Preferred’s relationship with the Rubins was important to Preferred. (Ibid.) They also agreed that Preferred only needed a principal paydown from the proceeds of the sale of the Beverly Hills Property, that following the sale of the Beverly Hills Property Preferred would then restructure the Loan, and that interest owed on the Loan could be paid by means of a separate loan. (Compl., ¶ 34.)

The Loan’s stated maturity date was March 5, 2020. (Compl., ¶ 35.) Preferred agreed to defer the maturity date to March 31, 2020, if the Rubins paid $37,000. (Ibid.) The Rubins made that payment, effectively deferring the maturity date on the Loan. (Ibid.)

By mid-March 2020, the COVID-19 pandemic occurred, and most banks were readily able to accommodate their affected borrowers. (Compl., ¶ 36.) Preferred reiterated and explicitly agreed in mid-April 2020 that the Rubins could sell the Beverly Hills Property, apply $8 million or more of the sales proceeds to pay down the outstanding principal owed on the Loan, and that Preferred would restructure the remaining outstanding loan amount. (Compl., ¶ 37.) (Note: The complaint identifies exhibit 10 as an email exchange. Instead, exhibit 10 attached to the complaint is a document entitled, “Business Loan Agreement.”) The April 2020 email exchange is identified by plaintiffs as a “forbearance agreement.” (Ibid.)

The Rubins listed the Beverly Hills Property for sale and kept Preferred informed of offers and the ongoing process. (Compl., ¶ 38.) Preferred did not keep the Rubins informed of their plans to record a notice of default and, as such, the Rubins rejected certain offers made on the Beverly Hills Property. (Compl., ¶ 39.) Had the Rubins accepted the offers, Preferred would have received its $8 million in principal paydown, the Loan would have been restructured, and the foreclosure halted before it began. (Ibid.)

Preferred recorded notices of default (NOD) on each property on June 3, 2020, but did not tell the Rubins at that time. (Compl., ¶ 40.) The Rubins learned of the NODs two weeks later when they arrived by mail. (Ibid.)

As a result of Preferred’s actions, the Rubins filed suit against Preferred on October 2, 2020, as case No. 20CV03206 (the Prior Action). (Compl., ¶ 42.) The Rubins successfully obtained a temporary restraining order in the Prior Action preventing Preferred from proceeding with the trustee sales of the three properties. (Compl., ¶ 43.)

On January 6, 2021, the parties entered into a written Forbearance Agreement which served to act as a settlement agreement of the Prior Action. (Compl., ¶ 44 & exhibit 11.) Among its express terms, the Forbearance Agreement required plaintiffs to file a request for dismissal of the Prior Action. (Compl., ¶ 45.) The Forbearance Agreement also required plaintiffs to pay Preferred $8 million by June 6, 2021, in exchange for a Change of Terms Agreement with Preferred for the balance of the loan, modifying the repayment terms for the outstanding balance. (Ibid.) Plaintiffs complied with the terms of the Forbearance Agreement and timely made monthly payments owing under the Forbearance Agreement. (Compl., ¶ 46.)

Between March 2021 and May 2021, plaintiffs received several offers to purchase the Beverly Hills Property. (Compl., ¶ 47.) Plaintiffs kept Preferred informed of the offers and of the opening of escrow within the timelines provided in the Forbearance Agreement. (Ibid.) Upon receiving notice from plaintiffs of the opening of escrow, Preferred was obligated to extend the Forbearance Termination Date by at least 30 days until at least July 6, 2021. (Compl., ¶ 48.)

Preferred in bad faith violated the Forbearance Agreement by recording a NOD on June 15, 2021, during the period by which the plaintiffs contractually were entitled to continued forbearance. (Compl., ¶ 49 & exhibit 12.) Preferred had predesigns to obstruct plaintiffs from receiving the benefit of the bargain of the Forbearance Agreement and to take steps to ensure that it would not have to enter into the Change in Terms Agreement as agreed. (Compl., ¶ 50.)

Plaintiffs accepted an all-cash offer to purchase the Beverly Hills Property, and the buyer waived contingencies. (Compl., ¶ 52.) The escrow was open and was set to close on October 6, 2021. (Ibid.) Plaintiffs are actively taking steps to close the escrow, but the primary factor preventing the sale from closing is the NOD and notice of sale recorded by Preferred which Preferred refuses to rescind. (Ibid.)

Pursuant to the Forbearance Agreement, Preferred has made a demand to the escrow to be paid $8 million from the sales proceeds of the Beverly Hills Property. (Compl., ¶ 53.) By doing so, Preferred is ratifying and seeking to enforce the Forbearance Agreement and is waiving any defects it contends existed in the plaintiffs’ performance. (Ibid.)

At about the same time, plaintiffs were negotiating with a third party to lease the Santa Barbara Property. (Compl., ¶ 55.) The rent to be paid under the terms of the lease would have been more than sufficient to service the Loan. (Ibid.) However, Preferred, without notice to plaintiffs, recorded an NOD on the Santa Barbara Property. (Compl., ¶ 56 & exhibit 13.) The tenant, upon learning of the NOD, refused to execute any lease agreement, resulting in a loss of significant rental payments and plaintiffs’ ability to promptly repay Preferred. (Compl., ¶ 56.) Preferred also recorded a NOD on the Sunset Property. (Compl., ¶ 56 & exhibit 14.)

Preferred has recorded notices of trustee’s sale (NOS) on each of the properties: a NOS for the Beverly Hills Property, noticing a sale for October 12, 2021; a NOTS for the Sunset Property, noticing a sale for October 12, 2021; a NOS for the Santa Barbara Property, noticing a sale for October 13, 2021. (Compl., ¶¶ 58-59 & exhibits 15-17.)

Preferred filed a demurrer and motion to strike portions of the complaint and, on February 15, 2022, the court sustained the demurrer as to the third cause of action for estoppel, the sixth cause of action for interference with prospective economic advantage, the eighth cause of action for unjust enrichment, the tenth cause of action for breach of fiduciary duty, and the eleventh cause of action for constructive fraud. Although they were given leave to amend, plaintiffs did  not do so. The remaining causes of action were the first, second, fourth, fifth, seventh, and ninth.

Preferred filed an answer to the complaint on April 5, 2022, asserting a general denial and 18 affirmative defenses. Concurrently with filing the answer, Preferred filed a cross-complaint against plaintiffs, asserting causes of action for: (1) breach of contract; (2) breach of guarantees; (3) money lent; (4) trespass; and (5) loss of use of real property.

On August 14, 2023, Preferred moved for summary judgment of each of plaintiffs’ remaining causes of action on the grounds that this action has no merit, there are no triable issues of material fact and Preferred is entitled to judgment as a matter of law. In the alternative, Preferred sought summary adjudication of each of the remaining causes of action.

The Rubin plaintiffs filed six declarations from various individuals that they claimed to be in support of their opposition. However, no opposition, separate statement, objections to Preferred’s evidence, or any other document was filed by plaintiffs, besides the declarations, until the day prior to, and the day of, the hearing on the motion.

Preferred also moved for an order dismissing with prejudice plaintiffs’ complaint and striking the answer filed by cross-defendants on the grounds that: (1) Plaintiffs and Cross-Defendants have deliberately and repeatedly violated their statutory discovery obligations despite being afforded numerous opportunities by both Preferred and this Court to comply; (2) Plaintiffs and Cross-Defendants have violated and refused to obey numerous orders of this Court designed specifically to remedy the impact of their ongoing failure to comply with their statutory discovery obligations; (3) Preferred has been prejudiced in its ability to defend itself against the complaint or prosecute its cross-complaint as a direct result of Plaintiffs and Cross-Defendants’ deliberate, repeated and wrongful failures to comply with their statutory discovery obligations and this Court’s orders; and (4) Plaintiffs and Cross-Defendants’ continuing misconduct, which this Court described in its June 7, 2023 order as ‘egregious,’ ‘deliberate’ and occurring with ‘rhythmic regularity,’ makes clear that any sanction less than terminating sanctions will be ineffective.

Following a continuance of the hearing on the motion for summary judgment from November 1, 2023, to November 15, 2023, so that the motions could be heard at the same time, the motions were granted on November 15, 2023.

The Rubins moved for a new trial on the granting of summary judgment. The motion was denied.

On January 31, 2025, the court entered default judgment in favor of Preferred and against the Rubins for $3,160,005.91 in damages and $5,709,019.54 in prejudgment interest, for a total judgment of $8,869,025.45. Notice of Entry of Judgment was filed and served on April 14, 2025.

Preferred now seeks $949,486.78 in contractual attorneys’ fees and $45,242.36 in costs and expenses. The motion was filed and timely served on May 28, 2025.

No opposition or other responsive document has been filed in response to the motion.

Analysis

Preferred’s request for attorneys’ fees consists of six time periods as follows: “(1) the time of the Rubins’ initial default on the Loan through the entry of the Forbearance Agreement, which time period included the inception and dismissal of the 2020 Lawsuit; (2) the date the Forbearance Agreement went into effect until the filing of the instant Action; (3) the filing of the instant Action through the entry of Judgment by the Court; (4) the intervening bankruptcy proceedings of 104 Sunset Plaza, LLC and DLJJ, which occurred concurrently with this Action and for the purpose of delaying the Action; (5) the time spent drafting the Motion for Judgment Pursuant to CCP § 585(d); and (6) the time spent drafting this Motion for Attorneys’ Fees and Costs.” (Bubman Decl., ¶ 28.)

“California follows the ‘American rule,’ under which each party to a lawsuit ordinarily must pay his or her own attorney fees.” (Musaelian v. Adams (2009) 45 Cal.4th 512, 516.) “[A] court has no discretion to award costs not statutorily authorized.” (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774.)

However, attorneys’ fees are allowable as costs if authorized by “contract,” “statute,” or “law.” (Code Civ. Proc., § 1033.5, subd. (a)(10)(A)-(C).)

“In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that 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.” (Civ. Code, § 1717, subd. (a).)

Preferred relies on several documents for their assertion of entitlement to contractual attorneys’ fees. Those documents include: (1) August 21, 2017, promissory note; (2) August 21, 2017, Deed of Trust on the Beverly Hills Property; (3) August 21, 2017, Deed of Trust on the Santa Barbara Property; (4) August 21, 2017, Commercial Guaranty of the note executed by Sunset; (5) August 21, 2017, Deed of Trust on Sunset Plaza; (6) August 21, 2017 Commercial Guaranty of the note executed by the Rubins, in their capacities as Trustees of the Rubin Family Trust, guaranteeing the obligations of Stuart on the note; and (7) April 23, 2019, Change in Terms Agreement. Each of the agreements relied upon contain attorneys’ fees provisions.

It is not disputed that Preferred is the prevailing party and that it is entitled to contractual attorneys’ fees as both defendants and cross-complainants in this action.

“[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.)

Counsel for Preferred has provided billing records, as Exhibits A through F to the Bubman declaration, that are sufficient to show the specific tasks undertaken and the time spent on each task. The court has thoroughly reviewed the billing records, which are only lightly redacted where necessary, and finds that counsel for Preferred spent a reasonable amount of time on each task identified, and that each task performed was reasonable and necessary in providing Preferred effective legal counsel.

This action was contentious, required the work of skilled counsel, and involved large sums of money. Preferred not only ultimately prevailed in the action but prevailed on several law and motion matters during the course of the litigation. This case was litigated over the course of more than three years and the court finds the hours expended reasonable. The court also finds the attorneys’ hourly rates reasonable.

The Rubins’ lack of opposition to the motion leads the court “to presume they had no meritorious arguments.” (Laguna Auto Body v. Farmers Ins. Exchange (1991) 231 Cal.App.3d 481, 489; disapproved of on other grounds by Garcia v. McCutchen (1997) 16 Cal.4th 469.)

Preferred will be awarded their requested attorneys’ fees of $949,486.78.

Costs

As noted above, Preferred also seeks $45,242.36 in costs.

“A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of service of the notice of entry of judgment or dismissal by the clerk under Code of Civil Procedure section 664.5 or the date of service of written notice of entry of judgment or dismissal, or within 180 days after entry of judgment, whichever is first. The memorandum of costs must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case.” (Cal. Rules of Court, rule 3.1700(a)(1).)

To the extent that Preferred seeks to recover its claimed costs, as allowable under Code of Civil Procedure section 1033.5, a timely memorandum of costs must be filed and served.