Yee v. Weinberg

1

GLORIA YEE, Plaintiff and Appellant, v. LEE WEINBERG et al., Defendants and Respondents.

A163850, A164131, A164691

California Court of Appeals, First District, Fourth Division

March 5, 2024

NOT TO BE PUBLISHED

City and County of San Francisco Super. Ct. No. CGC16555021

HIRAMOTO, J. ^[*]

After a bench trial, plaintiff landlord Gloria Yee prevailed against tenant and defendant restaurant enterprise Fat Noodle 2nd SF LLC, among others, in her action for (1) breach of contract (2) breach of express indemnity, and (3) negligence. In this consolidated appeal, we review an August 26 2021^[1] order denying Yee's motion for attorney fees as to United States Liability Insurance Company (USLI), who had intervened in the litigation before withdrawing on the eve of trial. We also review the judgment and a December 21 post-judgment order regarding the remaining litigants' motions for attorney fees. Finding no reversible error in any respect, we affirm the judgment and the challenged attorney fee orders.

BACKGROUND

Yee is the trustee of a family trust that owns the Bourdette Building in San Francisco. In 2014, she leased space for a restaurant to Fat Noodle 2nd SF, LLC (Fat Noodle 2), a company later determined to be the alter ego of Fat Noodle LLC (Fat Noodle 1).^[2] Involved in both Fat Noodle companies was a trio of restaurateurs: Lee Weinberg, Adam Fleischman, and Joshua Skenes. Weinberg and Fleischman's involvement was through AdVantage Restaurant Partners, LLC, a company co-managed by Weinberg's Dauntless, LLC, and Fleischman. Skenes was involved in Fat Noodle through his own company, Saison, LLC, of which Fleischman was also a member.

In 2015, an unpermitted demolition took place, but the planned Fat Noodle restaurant failed to materialize, rent payments stopped, and Yee sued Weinberg and Fat Noodle 2 for breach of contract, breach of express indemnity, and negligence.

In time, Yee would amend her complaint to add Fat Noodle 1, Fleischman, Skenes, Saison, AdVantage, and Dauntless as defendants. Dauntless had been suspended some four months before the filing of Yee's complaint, and the other legal entities soon followed suit: before trial began in 2021, the corporate charters of the Fat Noodle defendants, AdVantage, and Saison had all been suspended. The trial court found that the prerequisites to try the claims against the suspended companies in absentia under section 594(a) of the Code of Civil Procedure were satisfied and accordingly proceeded with trial.

USLI Intervenes then Withdraws the Complaint in Intervention

USLI, which had issued a commercial general liability (CGL) policy to Fat Noodle 2 prior to the filing of Yee's complaint, moved for leave to intervene on behalf of Fat Noodle 2, Fat Noodle 1, AdVantage, Saison, and Dauntless, respectively. On June 21, the trial court granted those motions, except for the pending motion concerning Saison. On the same day, USLI simultaneously withdrew its motion to intervene on behalf of Saison and filed a motion for dismissal of its complaint in intervention on behalf of Fat Noodle 2, Fat Noodle 1, and AdVantage suspended entities. Those requests were granted and a bench trial proceeded against Weinberg, Fleischman, Skenes, and a newly reinstated Dauntless, LLC.

On August 26, in light of the withdrawal of USLI's motion to intervene on behalf of Saison and its requests for dismissal as to the other entity defendants, the trial court found that Yee had "prevailed against USLI and [was] entitled to reasonable costs as provided by statute." In the same order, however, the trial denied Yee's motion for attorney fees against USLI because the lease agreement's attorney fees provision did not apply to USLI. In relevant part, that agreement provides: "In the event of any dispute between Landlord and Tenant in any way related to this Lease, and whether involving contract and/or tort claims, the non-prevailing party shall pay to the prevailing party all reasonable attorneys' fees ...." (Italics added.) The trial court reasoned as follows: "While USLI is a party to the case, USLI is not a party to the lease, and there is no authority to order USLI to pay plaintiffs attorneys' fees absent a contract between the parties containing an attorneys' fee provision pursuant to Civil Code section 1717."

Outcome of the Bench Trial

At the trial's conclusion, judgment was entered for Yee and "against tenant [Fat Noodle 2] and Fat Noodle [1]" for breach of contract and breach of express indemnity "in the amount of $1,435,081." For the same two causes of action, judgment was entered "for Dauntless, Fleischman, Weinberg, and Skenes." Yee "did not prevail against AdVantage and Saison on [those] causes of action, but because they [were] suspended corporations, judgment [would] not enter for AdVantage and Saison ...." As to the negligence claim, judgment entered for Yee "and against" Fat Noodle 2, and Fat Noodle 1, AdVantage, and Weinberg, but judgment also entered "for Dauntless, Fleischman and Skenes." Yee "did not prevail against Saison on the third (negligence) cause of action, but because Saison [was] a suspended corporation, judgment [would] not enter for Saison ...." For the same cause of action, the trial court awarded Yee damages of $10,160, a figure that included Department of Building Inspection fines, the costs Yee incurred to remove asbestos and debris, and interest.

As explained in the September 3 statement of decision, the judgment rested in part on the trial court's resolution of Yee's claims concerning alter ego liability. In this respect, the trial court determined that Yee had met her burden of showing by preponderance of the evidence that Fat Noodle 1 was an alter ego of Fat Noodle 2. However, the court also concluded that Yee had failed to make the requisite showing of alter ego liability as to AdVantage, Saison, Dauntless, Skenes, Fleischman, and Weinberg.

Court Decides Post Trial Attorneys' Fees Motions

On December 21, the trial court ruled on the parties' various postjudgment motions for attorney fees, to strike and tax costs, and to offset. The court ordered that Yee "recover attorney[] fees . . . from [Fat Noodle 2] and Fat Noodle" 1 (but not Weinberg), and that the prevailing defendants- Dauntless, Skenes, Fleischman, and Weinberg-recover attorney fees from Yee. In explaining the latter orders, the trial court rejected Yee's argument that those "defendants should be denied their fees because they were paid by USLI and" such fee awards "would in effect reimburse nonprevailing USLI." On the other hand, in awarding reasonable attorney fees to the prevailing defendants, the trial court based its order on the hourly rate USLI actually paid the various attorneys, not the prevailing rates for lawyers with similar experience and expertise.

Wherever the same firm represented both a prevailing defendant and a suspended corporation via USLI's complaints in intervention, the trial court awarded only those fees that related solely to the defense of the prevailing defendant; when an attorney's efforts would have been undertaken even if the prevailing defendant was not a party, the fees for those efforts were not awarded. As for the motion for attorney fees filed by Fleischman, whose counsel did not represent any suspended corporation, the trial court found that "much of the work billed . . . was not 'reasonably necessary to the conduct of the litigation' "; accordingly, the court reduced the number of billed hours underlying the attorney fees awarded to Fleischman.

DISCUSSION

1. There Was No Error in the Trial Court's Denial of Yee's Motion for Attorney fees as to USLI

Yee argues that the trial court erred in denying her motion for attorney fees as to USLI. According to Yee and contrary to the trial court's reasoning, "[w]here an intervening insurer crosses the line from defending solely under its policy to asserting affirmative claims under its insured's contract, the prevailing party should recover attorney fees against the intervening insurer just as it would" have against a contracting party. We are not persuaded.

We review "the legal basis for" an order denying a motion for attorney fees "de novo." (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751.) "Except as attorney fees are specifically provided for by statute, the measure and mode of compensation . . . is left to the agreement, express or implied, of the parties." (Code Civ. Proc., § 1021.) No statute specifically provides for Yee to recover attorney fees from USLI,^[3] and no agreement for attorney fees exists between Yee and USLI. Thus, the trial court had no power to grant Yee's motion.

As Yee acknowledges, "there may not be a case specifically on point in this context" standing for the proposition she urges us to adopt. But Yee has no authority for her desired extension of existing law, either, and we decline to take the law that further step. In Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, the party ordered to pay attorney fees had agreed to a contractual attorney fee provision; here, USLI made no such agreement. Nor is USLI an intended third-party beneficiary of the lease, as was the nonsignatory party from whom attorney fees could be recovered in Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 379-380.

In short, the trial court was correct to conclude that "there is no authority to order USLI to pay" Yee's attorney fees.^[4]

2. Yee's Appeal from the Judgment

In challenging the judgment, Yee argues that the trial court erred in three respects: (1) failing to ascribe alter ego liability to any entity or person other than Fat Noodle 1 (2) failing to consider whether AdVantage, Saison, Dauntless, and the individual defendan...