Motion for Attorney Fees in On, Omar Jay vs Stephen A Vannucci, MD, Inc et al| Trellis.Law

On December 31, 2019 a Motion-Secondary was filed involving a dispute between On, Barbara, On, Omar Jay, and Richey, Donald F, Stephen A Vannucci, Md, Inc, for civil in the District Court of Butte County.

Preview
I JAMES J. BANKS (SBN 119525)
W. DAVID CORRICK (SBN 171827)
2 BANKS & WATSON
901 F Street, Suite 200 8/20/2020
3 Sacramento, CA 95814-0733
Tel: (916) 325-1000
4 Fax: (916) 325-1004
Email: jbanks@bw-finn.corn
5 Email: dcorrick@bw-firm.corn
6 PATRICIA A. SAVAGE (SBN 236235)
LAW OFFICES OF PATRICIA A. SAVAGE
7 1550 Humboldt Road, Suite 4
Chico, CA 95928
8 Tel: (530) 809-1851
Fax: (530) 592-3865
9 Email: psavesq@gmail.corn
10 Attorneys for Petitioners,
OMAR JAY ON and BARBARA ON
11

12 SUPERIOR COURT OF THE STATE OF CALIFORNIA
13 FOR THE COUNTY OF BUTTE
14

15 OMAR JAY ON and BARBARA ON, Case No.: 19CV03856
16 Petitioners, PETITIONERS'EMORANDUM PN
SUPPORT OF OPPOSITION TO
17 v. RESPONDENTS'. PAUL SAJBEN, M.D.
AND F. PAUL SA JBEN, M.D., A
18 STEPHEN A. VANNUCCI, M.D., INC. and PROFESSIONAL CORPORATION'S
NORTH VALLEY DERMATOLOGY MOTION FOR AWARD ATTORNEYS'EES
19 CENTER, AND COSTS
20 Respondents. TELEPHONE APPEARANCE
21 DATE: September 2, 2020
TIME: 9:00 AM
22 DEPT: 7

100097881.Doc: i I
PETITIONERS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'EES
TABLE OF CONTENTS

Page
3 I. INTRODUCTION .

4 II. UNDERLYING FACTUALBACKGROUND..
5 A. Mr. On's Employment Agreement with Stephen A. Vannucci, M.D., Inc..................,...... 2
6 B. Formation of North Valley Dermatology Center as a General Partnership........................ 3

7 C. Arbitral Proceeding Pursuant to the Employment Agreement. ........3

8 D. Final Arbitration Award — Issued on December 16, 2019. . ................................
3

1. Interim arbitration award — issued on June 3, 2019.
10 2. Attorneys'ees and costs award — issued on November 12, 2019.....
11 III. PROCEDURAL HISTORY — BUTTE COUNTY SUPERIOR COURT ....
12 A. Petition to Confirm Final Award of Arbitrator and Enter Judgment Thereon.................... 4
13 B. NVDC Filed for Chapter 11 Bankruptcy Protection on January 28, 2020 ......................... 5

14 C. Judgment Entered Against SAVI in Favor of Petitioners on February 13, 2020 ...............
5

15 IV. PETITIONERS'CP SECTION 187 MOTION TO AMEND JUDGMENT....

16 A. The Motion to Amend — Based on General Partner Liability for Partnership Debts ......... 6
17 B. FPSI's Opposition to Motion to Amend. . ......................................
7

18 C. Hearing on Motion to Amend and Order Thereon. . ........................... 7
19 V. LAW AND ARGUMENT

20 A. Petitioners'otion to Amend the Judgment Was Not an "Action on the Contract" ......... 9
21 B. There May Only One "Prevailing Party" Under Section 1717..... ...I0

22 C. FPSI*s Motion Cites to Inapposite and Irrelevant Authorities.... ...12

D. The Requested Attorneys'ees are Not Reasonable 14

24 VI. CONCLUSION .. 14

I00097881 Doc, 1
i 1

PETITIONFRS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'FES
TABLE OF AUTHORITIES

Page
3 Cases
4 Ajida Technolgies, Inc. v. Roos Instruments
(2001) 87 Cal.App.4th 534 .. ...1,12,13
5
Anmaco Inc. v. Bohlken
6 (1993) 13 Cal.App.4th 891 ...1 3

7 Baker Botts L.L.P. v. ASARCO LLC
(2015) 576 U.S. 121...............
8
de la Carriere v. Greene
9 (2019) 39 Cal.App.5th 270 ...9,10,11
10 Dow Jones Co. v. Avenel
(1984) 151 Cal.App.3d 144.
11
Frog Creek Partners, LLC v. Vance Brown, Inc.
12 (2012) 206 Cal.App.4th 515 ...9,11
13 Gorman v. Tassaj ara Development Corp.
(2009) 178 Cal.App.4th 44 ...14
14
Gray v. Brunold
15 (1903) 140 Cal. 615

16 Greenspan v. LADT, LLC
(2010) 191 Cal.App.4th 486
17
Hyduke's Vallev Motors v. Label Financial Corp.
18 (2010) 189 Cal.App.4th 430 . ...13

19 Mustachio v. Great Western Bank
(1996) 48 Cal.App.4th 1145 .
20
Nassif v. Municipal Court
21 (1989) 214 Cal.App.3d 1294 .....

22 Presley of Southern California v. Whelan
(1983) 146 Cal.App.3d 959 ...12
23
Salawy v. Ocean Towers Housing Corp.
24 (2004) 121 Cal.App.4th 664.
25 Wood v. Santa Monica Escrow Co.
(2009) 176 Cal.App.4th 802 .
26
Statutes
27
Civ. Code FI1717 ...1,8,9,10
28

{00097881.ooc; II 11

PETITIONERS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'EFS
1 Code Civ. Proc. II 128.5.

2 Code Civ. Proc. Cj 187

3 Corp. Code 16306..
I'I

4 Corp. Code $ 16307

I00097881.DOC I ~ 111

PETITIONERS'PPOSITION 'I'0 FPSI'S MOTION FOR ATTORNEYS' EES
I I. INTRODUCTION
2 The Motion for Award of Attorneys'ees and Costs (" Motion" ) filed by respondent F. Paul
3 Sajben, M.D., A Professional Corporation ("FPSI")'s not well-taken, and is the epitome of "frivolous"
4 as that tenn is defined by Code of Civil Procedure section 128.5. FPSI improperly argues entitlement
5 to contractual attorneys'ees and costs under Civil Code section 1717 (" Section 1717") — which by its
6 terms only authorizes an award of attorneys'ees and costs to the "prevailing party" in an "action on a
7 contract" where the contract at issue specifically provides for an award of fees and costs incurred in
8 enforcing the contract.
9 In a demonstration of contorted reasoning and unsound reliance upon inapposite authorities—
10 primarily Ajida Technolgies, Inc. v, J(oos Jnsiruntents (2001) 87 Cal.App.4th 534 — FPSI advances two
11 fallacious positions in support of its Motion. First, FPSI contends the Motion to Amend Judgment
12 (" Motion to Amend" ) filed by OMAR JAY ON (" Mr. On" ) and BARBARA ON (collectively
13 "Petitioners" ) pursuant to Code of Civil Procedure section 187 (" Section 187")4 represented an "action
14 on a contract" —
specifically the contract styled "Stephen A. Vannucci, M.D., Inc. Physician Assistant
15 Employment Agreement for O.J. On, P.A." (the "Employment Agreement" ). Next, FPSI claims by
16 virtue of this Court's denial of the portion of the Motion to Amend which sought, inter alia, an order
17 adding FPSI as an additional debtor to the judgtnent entered by this Court in favor of Petitioners and
18 against STEPHEN A. VANNUCCI, M.D., INC. ("SAVI") on February 13, 2020, FPSI is the "prevailing

19 party" on an "action on the contract." Both positions are contrary to established law — not to mention
20 rational analysis.

21
'. Paul Sajben,
Petitioners'otion
M.D.
to
("Dr.
Amend
Sajben')
sought to
is erroneously
add FPSI as
identified as a movant
a judgtnent debtor, and
in
was
the caption
nor directed
of FPSI's moving papers.
'in his
22 toward Dr. Sajben
personal capacity. Further, the papers opposing the Motion to Amend were filed on behalf of FPSI — and not Dr. Sajben.
'ode Civ. Proc. IJ128.5(b)(2): 'Frivolous" means totally and completely without merit or for the sole purpose of harassing
arl opposulg party.
24
'iv. Code h 1717(a): 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
26 not, shall be entitled to reasonable attorney's fees in addition to other cost~.
4
Code Civ. proc. I 1S7: "When jurisdiction is, by the Constitution or this Code, or by any other statute, conferred on a
27 Court or judicial officer, all the means necessary to carry it into effect are also given,'nd in the exercise of this jurisdiction, if
the course of proceeding be not specifically pointed out by thisCode or the statute, any suitable process or mode of
proceeding may be adopted which may appear most conformable to the spirit of this Code."

Iooosrsst.Doc, i I I
PETITIONERS'PPOSI11ON TO FPSI'S MOTION FOR ATTORNEYS'FES
I As explained infra, incontrovertible principles under California law conclusively establish the
2 Motion to Amend was plainly not an "at;lion" on the Employment Agreement within the meaning of
3 Section 1717. The term "act'n" refers to the whole of a lawsuit, and not discrete motions within the
4 suit. That fact alone ends the analysis — FPSI is not entitled to an award of attorneys'ees and costs
5 under Section 1717. Nonetheless, it is imperative to note FPSI may never be deemed the "prevailing
6 party" in an "action" on the Employment Agreement because the law permits only one "prevailing
7 party" on a given contract in a given lawsuit. The "action" on the Employment Agreement has already
8 been fully adjudicated through arbitral proceedings, and the arbitrator designated Petitionerss as the
9 "prevailing party." In sum, there can only be one "prevailing party," and that position has been filled.

10 In brief, FPSI may not be awarded Section 1717 attorneys'ees and costs because the Motion to
11 Amend was not an "action" on the Employment Agreement, and because in the actual "action" on the
12 Employment Agreement, the Petitioners were deemed the "prevailing party.*'herefore, Petitioners
13 respectfully ask the Court to deny FPSI's Motion in its entirety.
14 II. UNDERLYING FACTUAL BACKGROUND
15 A. Mr. On's Employment Agreement with Stephen A. Vannuccl, M.D., Inc.
16 In January 2007, Mr. On and SAVI entered into the Employment Agreement, which had an
17 effective date of January I, 2007. (Declaration of James J. Banks in Support of Petitioners'pposition
18 to Respondents F. Paul Sajben, M.D. and F. Paul Sajben, M.D., A Professional Corporation's Notice of
19 Motion (" Banks Decl.") 2:3-5, Exhibit I). Paragraph 10 of the Employment Agreement provided all
20 disputes "arising, concerning, or relating" to Mr. On's employment with SAVI were to be submitted to
21 binding arbitration pursuant to the rules for the resolution of employment disputes of the American
22 Arbitration Association ("AAA") then in effect. (Banks Decl., Exhibit I at $ 10.) Paragraph 10

23 conferred discretion on the arbitrator to award the prevailing party reasonable costs and attorney fees
24 incurred in bringing or defending an action." (Ibid., emphasis added.)
25

28 In the arbitral proceeding, Petitioners herein were referenced as
"Claimants.'00097ssl.Doc,
i ) 2
PETITIONFRS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'EES
I B. Formation of North Valley Dermatology Center as a General Partnership.
2 In September 2010, SAVI, FPSI and Donald Richey, M.D., Inc., A Professional Corporation
3 ("DRI") formed a general partnership dubbed North Valley Dermatology Center ("NVDC"), and
4 became its original general partners. At or around the time of its formation, the NVDC partnership
5 accepted an assignment of Mr. On's Employment Agreement from SAVI —
thereby assuming all rights
6 and obligations thereunder. In November 2012, Kafele T. Hodari, MD, Inc. ("KTHI") joined the NVDC
7 partnership, and remained a general partner until sometime in mid-2020. Sometime in 2015, DRI left
8 the partnership secondary to the retirement of Donald Richey, M.D.

9 C. Arbitral Proceeding Pursuant to the Employment Agreement.
10 On January 25, 2018 — pursuant to paragraph 10 of the Employment Agreement — Petitioners
11 initiated an "action on the contract" by submitting a Demand for Arbitration ("DFA'*) with AAA against
12 SAVI and NVDC, in which they asserted claims under both state and federal law "arising from" and
13 "concerning" Mr. On's employment. The parties mutually selected Catherine C. Harris to serve as the
14 neutral arbitrator (the "Arbitrator" ). The Arbitrator conducted and presided over arbitration proceedings
15 between the parties over a seven-day period — November 5-9, 13 and 14, 2018.

16 D. Final Arbitration Asvard — Issued on December 16, 2019.
17 The Arbitrator issued her Final Award on December 16, 2019. (Banks Decl., 2:6-7, Exhibit 2).
18 Attached to the Final Award as Exhibits A and B, respectively — and fully incorporated therein by
19 reference — are (I ) the Interim Award the Arbitrator (" Interim Award" ) issued by the Arbitrator on June
20 3, 2019; and (2) the Ruling on Claimants'otion for Attorneys'ees and Costs (" Fees and Costs
21 Award" ) issued on November 12, 2019. (Jd. at 2:7-10, Exhibit 2 at Exhibits A and B.) The Final Award
22 granted Petitioners a total recovery of S2,497,802.41 — which included attorneys'ees and costs — in
23 addition to prejudgment interest calculated through the date of issuance. (Jd., Exhibit 2 at 2:23-3:15.)
24 l. Interim arbitration award — issued on June 3. 2019.
25 In her June 3, 2019, Interim Award, the Arbitrator imposed joint and several liability against
26 SAVI and NVDC and in favor of Petitioners in the amounts of (I) $ 470,055 for uncompensated labor,
27 (2) $ 69,939 for missed meal breaks; and (3) $ 88,890 for missed rest periods — in addition to pre-
28 judgment interest at the simple rate of 7% per annum on those amounts. (Banks Decl., Exhibit 2 at

{00097ssl Doc. II 3
PETITIONERS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'FES
I Exhibit A, 35:21-25, 39:5-8.) The Arbitrator further imposed sole liability against NVDC and in favor
2 of Petitioners in the amount of $ 48,729.33 for unpaid compensation in the form of wage restitution
3 based upon NVDC's practice of deducting its mandatory 401(k) employer contributions from Mr. On's
4 wages — not only for employer contributions NVDC made on behalf of Mr. On, but also those it made
5 on behalf of other NVDC employees. (ld. at 42:4-9.)

2. Attomevs'ees and costs award — issued on November 12. 2019.

7 The Interim Award invited Petitioners to file an application for attorneys'ees and costs — an
8 invitation Petitioners accepted. In her November 12, 2019, Fees and Costs Award, the Arbitrator
9 unequivocally declared the Petitioners to be the "prevailing parties." (Banks Decl., Exhibit 2 at
10 Exhibit B, page 1.) She determined Petitioners had achieved their primary litigation objectives, and
11 under those circumstances "there is no question that [Petitioners] are entitled to an award of reasonable
12 attorneys'ees and costs." (Ibid; etnphasis added.) As the prevailing parties, the Arbitrator awarded
13 Petitioners a total of $ 1,328,812.07 in attorneys'ees and $ 152,083.65 in costs. (Id. at page 11.) NVDC
14 and SAVI were held jointly and severally liable for attorneys'ees and costs in the amounts of
15 $ 1,165,165.07 and $ 97,706.65, respectively, with NVDC being held solely liable for the re{naining
16 $ 163,647 in attorneys'ees and $ 54,337 in costs. (Banks Decl., Exhibit 2 at 3:5-15.)
17 It bears noting the Arbitrator determined Petitioners were entitled to both statutory and
18 contractual attorneys'ees and costs — statutory fees and costs pursuant to certain provisions of the
19 Labor Code, including sections 2802 and 218.5, and contractual attorneys'ees costs under paragraph
20 10 of the Employment Agreement. (Banks Decl., Exhibit 2 at Exhibit B, pages 1-2.) The Arbitrator
21 observed, "Even in the absence of express statutory authority, the arbitrator would have the discretionary
22 authority to award fees and costs pursuant to [paragraph] 10 of the employment agreement." (ld. at page
23 2.) Thus, while recognizing her authority to award attorneys'ees and costs under the Employment
24 Agreement, the Arbitrator actually awarded fees and costs pursuant to statute. (Jd. at pages 1-2.)
25 IH. PROCEDURAL HISTORY — BUTTE COUNTY SUPERIOR COURT
26 A. Petition to Confirm Final Award of Arbitrator and Enter Judgment Thereon.
27 Petitioners'8
filed a
On December 31, 2019 — pursuant to Code of Civil Procedure section

Verified Petition to Confirm Final Award of Arbitrator and Enter
1285, et seq.

Judgment
—

in Confortnity

{00097881Doc; I } 4
PETITIONERS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'EES
1 Therewith (" Petition" ) in this Court, with a hearing date of January 29, 2020. (Banks Decl., 2:11-15,
2 Exhibit 3.) In accordance with the Final Award, the Petition sought entry of judgment in favor of
3 Petitioners and against SAVI and NVDC — jointly and severally — in the amount of $ 2,231,049.08, and
4 against NVDC solely in the additional amount of $ 266,753.33, for a total of $ 2,497,802.41. (Id.at 8:24-
5 28.) On January 28, 2020, the Court issued a tentative ruling granting the Petition in its entirety. (Banks
6 Decl., 2:16-17, Exhibit 4).

7 B. NVDC Filed for Chapter 11 Bankruptcy Protection on January 28, 2020.
8 At or about 4:28 p.m. on January 28, 2020 — after the Court had issued its tentative ruling
9 granting the Petition — counsel for NVDC advised Petitioners'ounsel NVDC had filed a Voluntary
10 Petition for Non-Individuals Filing for Bankruptcy (" Bankruptcy Petition" ) that day in the United States
11 Bankruptcy Court, Eastern District of California, Sacramento Division (" Bankruptcy Court" ). As a
12 consequence of the bankruptcy filing, the proceeding to confirm the Final Award and enter judgment
13 thereon was automatically stayed as against NVDC.
14 C. Judgment Entered Against SAVI in Favor of Petitioners on February 13, 2020.
15 On February 13, 2020, the Court — "having confirmed the Final Award in all respects*' entered
16 judgment in conformity therewith in favor of Petitioners and against SAVI in the total amount of
17 $ 2,231,049.08, exclusive of additional prejudgment interest incurred from December 17, 2019 through
18 February 13, 2020 (the "Judgment"). (Banks Decl., 2:18-19, Exhibit 5.) By reason of the automatic
19 stay, the Court did not enter judgment against NVDC, and the $ 266,753.33 liability imposed solely on
20 NVDC in the Final Award was not included therein. (Id., Exhibit 5 at 2:3-19.)
21 IV. PETITIONERS'CP SECTION 187 MOTION TO AMEND JUDGMENT
22 On March 27, 2020, Petitioners filed the Motion to Amend pursuant Section 187 seeking, inter
23 alia, an order to add FPSI, DRI and KTHI as additional judgment debtors for the full liability imposed
24 on NVDC by the Final Award — which Final Award has been confirmed in its entirety by Judge
25 On July 2020, Bankruptcy Court judge, the llonorable (" Judge
16, Christopher M. Klein Klein"), issued an order
modifying the automatic stay for the purpose of permitting petitioners to seek entry of judgment against NVDC in this
26 proceeding. On or about August 11, 2020, a stipulation for entry of judgment against NVDC in the amount of $ 2,497,802.41,
which is in conformity with the Final Award, in addition to: (I) prejudgment interest on $ 968,177.36 calculated at a simple
27 interest rate of 7% from December 16, 2019, until entry of judgment as provided in the Final Award; and (2) costs pursuant
to Code of Civil Procedure section 1032 of $ 463.06, and proposed judgment thereon, was filed in this Court. On August 13,
2020 judgment was entered against NVDC pursuant to the stipulation. (Banks Decl., 2:20-27.)

1000978St DOC; i'
PFTITIONERS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'EES
I Mosbarger. (Banks Decl., 3:1-2, Exhibit 6.)'ection 187 has long been recognized as authorizing
2 courts to amend judgments to add judgment debtors. (Dow Jo&ies Co. v. Avenel (1984) 151 Cal.App.3d
3 144, 148.) The concept underlying the right to amend a judgment is based on the reality that the
4 amendment does not constitute the prosecution of a claim against a new party, but rather represents a

5 correction of the record to reflect the real name of the judgment debtor. (See, e.g., Greenspan v.LADT,
6 LLC (2010) 191 Cal.App.4th 486, 508-509 [observing CCP I) 187 vests a trial court with the authority to

7 amend its judgment so the judgment will designate the real defendants].)

8 A. The Motion to Amend — Based on General Partner Liability for Partnership Debts.
9 A long-established tenet of California law holds general partners are liable for all obligations of
10 the general partnership. (See, Gray v. 8runold (1903) 140 Cal. 615, 620 [observing each partner is
11 liable in solido for all partnership debts].) The joint and several liability of all general partners for
12 partnership obligations is codified at Corporations Code (]section 16306(a), which reads, 'Except as
13 otherwise provided in subdivisions (b) and (c), all partners are liable jointly and severally for all
14 obligations of the partnership unless otherwise agreed by the claimant or provided by law." (The
15 exceptions are inapplicable because (I) Petitioners did not seek to add partners who joined NVDC after
16 the partnership liability was incurred, and (2) NVDC is not a registered limited liability partnership.)
17 Petitioners'otion to Amend was founded and based solely upon the status of FPSI, DRI and
18 KTHI as general partners of NVDC at the time the partnership's obligation to Petitioners arose. (Banks
19 Decl., Exhibit 6 at 15:11-13.) The moving papers did not allege any independent wrong-doing or
20 malfeasance against any of NVDC's general partners, including FPSI, but made the case that adding
21 them to the Judgment — a Judgment based upon a wholly confirmed Final Award imposing a substantial
22 financial obligation on NVDC — would effectuate justice. (ld. at 14:1-26.) Petitioners acknowledged
23 motions to add judgment debtors most frequently arise in the context of alter ego liability, but argued no
24 such analysis was necessary — thereby obviating due process considerations — because NVDC s general
25 partners are all liable for NVDC's obligations on the basis of their general partner status under long-

The relief sought by the Motion to Amend was four-fold: (1)to include the full obligation of the liability attributable to
NVDC as set forth in thc Final Award, plus additional prejudgment interest of $ 6,995.26; (2) to make SAVI — as an NVDC
general partner — liable for the full obligation; (3) to add NVDC general partners FPSI, DRI, and KTHI as additional
judgment debtors for the full NVDC obligation; and (4) to add $ 53,361.80 in post-judgment interest as against SAVI. (Banks
28 Decl., Exhibit 6 at I:7-16.)

100097ssi Doc; t) 6
PETITIONERS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'EES
I standing legal principles and specific statutory law. (Jrf.at 14:5-8.) The moving papers did not request
2 an award of attorneys* fees or costs if the Motion to Amend was granted because no authority for such
3 an award exists.

4 B. FPSI's Opposition to Motion to Amend.
5 On or about May 6, 2020, FPSI filed an Opposition to Petitioners'otion to Amend Judgment
6 (" Opposition" ) in response to Petitioners'otion to Amend. (Banks Decl., 3:3-5, Exhibit 7.) In its
7 Opposition, FPSI primarily argued (I) the Motion to Amend was premature because at present there is
8 no judgment against NVDC, and (2) adding FPSI would violate due process. FPSI's Opposition did not
9 request an award of attorneys'ees or costs in the event Petitioners'otion to Amend was ultimately
10 denied, and cited no authority establishing entitlement to any such award.
11 C. Hearing on Motion to Amend and Order Thereon.
12 The Motion to Amend originally came up for hearing on May 20, 2020, before the Honorable
13 Tamara L. Mosbarger (" Judge Mosbarger"). However, during the hearing, Judge Mosbarger expressed
14 concerns about a possible conflict, and she did not render a final ruling. On May 22„2020, she recused
15 herself. After two more Butte County Superior Court judges were disqualified pursuant to Code of Civil
16 Procedure section 170.6, the Motion to Amend came up for hearing before the Honorable Sandra L.
17 McLean (" Judge McLean") on June 24, 2020. Judge McLean denied with prejudice the portion of the
18 Motion to Amend seeking to add FPSI, DRI, and KTHI as additional judgment debtors under Section
19 187 on two grounds: (I) there was no judgtnent against NVDC at that time, and Petitioners had not
20 provided authority showing it was appropriate to add the general partners as judgment debtors under
21 Section 187 in light of that fact, and (2) adding the general partners as additional judgtnent debtors
22 would violate their due process rights. Judge McLean granted the portion of the Motion to Amend
23 seeking additional pre-judgtnent interest in the amount of $ 6,995.26 to be applied to the Judgment. On
24 July 9, 2020, Judge McLean executed an order setting forth her rulings entitled, "Order After Hearing on
25 Petitioners'otion to Amend Judgment (" Order" ). (Banks Decl., 3:9-10, Exhibit 8.) Judge McLean's
26

27
"
SAVI, DRI and KTHI each filed oppositions to the Motion to Amend. However, none of those entities have asserted a
28 claim for attorneys'ees or costs by reason of the Court's denial of the Motion to Amend. (Banks Decl., 3:6-}I.)

{000978s I.noc;I } 7
PETITIONERS'PPOSITION TO FPSI'S MOTION FOR ATTORNEYS'EFS
I Order does not identify a "prevailing party', and does not provide for an application seeking attorneys'
fees or costs.

3 V. LAW AND ARGUMENT
4 In Baker Borts L.L.P, v.ASARCO 1 LC (2015) 576 U.S. 121, the United States Supreme Court
5 instructed the "basic point of reference when considering the award of attorney's fees is the bedrock
6 principle known as the American Rule: Each litigant pays his own attorney's fees, win or lose, unless a
7 statute or contract provides otherwise." (Id. at 126; citations omitted.) The "bedrock principle"
8 enunciated by the Baker Botts Court is codified at California law at Code of Civil Procedure section
9 1021 —
providing that in the absence of statutory attorneys'ees pursuant to contract, each party to
10 litigation must bear its own attorneys'ees. FPSI does not assert a claim for statutory attorneys'ees—
11 as indeed no such authority exists — but in what may fairly be characterized as a display of twisted logic
12 and misapprehension of the law, argues entitlement to contractual attorneys'ees under Section 1717.
13 FPSI's convoluted argument ineffectually attempts to connect the following dots in support of its
14 Motion: (I) the Final Award — which was confirmed and entered as a judgment against SAVI — included
15 an award of attorneys'ees pursuant to paragraph 10 of the Employment Agreement (2) Petitioners
16 filed a Motion to Amend under Section 187, which sought to add FPSI as an additional judgtnent debtor;
17 (3) the Petitioners'otion to Amend was an "action" on the Employment Agreement; (4) had the Court
18 granted Petitioners Motion to Amend and issued an order making FPSI an additional judgment debtor,
19 FPSI would have been liable for the attorneys'ees imposed by the Final Award, which have since been

20 reduced to judgment; (5) contractual attorneys'ees clauses are reciprocal in nature; (6) because the
21 Court denied the portion of the Motion to Amend seeking to add FPSI as an additional judgment debtor,
22 FPSI is the "prevailing party" in an "action" on the Employment Agreement; and (7) as the "prevailing
23 party" in an "action" on the Employment Agreement, FPSI is entitled to an award of attorneys'ees and
24 costs under Section 1717. (Memorandum in Support of Motion for Award of Attorneys'ees and Costs

FPSI does not even get this allegedfoundational "fact" correct. As noted, supra, while the Arbitrator acknowledged her
authority to award attorneys'ees and costs under the Employment Agreement, a careful reading of her Fees and Costs
Award reveals she actually awarded fees and costs to Petitioners pursuant to statute. Therefore, FPSI's argument that the
27 Judgment includes an award of contractual attorneys'ees pursuant to the Final Award is defective ab initio. Since the
awarded attorneys'ees and costs were statutory in nature, had the Court permitted FPSI to be added to the Judgment
28 pursuant to Section 187, FPSI would not have been liable for contractual attorneys'ees as it incorrectly maintains.

I00097sst.Doc;I I 8
PE1TI'IONERS'PPOSI1'ION TO FPSI'S MOTION FOR ATTORNEYS'EES
I (" Memorandum" ) at I:22-27, 2:23-3:2, 3:9-11, 4:23-5:3.) In short, while FPSI's byzantine argument is
2 hard to follow, it boils down to an assertion that the Motion to Amend was an "action" on the
3 Employment Agreement, and since the Court denied the aspect of the 1.'otion to Amend seeking to add
4 FPSI as an additional judgment debtor, FPSI is the "prevailing party" on that "action" within the
5 meaning of Section 1717. FPSI's argument is fraught with error.
6 A. Petitioners'otion to Amend the Judgment Was Not an "Action on the Contract."
7 The term "action on a contract" is not defined in Section 1717, or elsewhere in related Civil
8 Code in provisions. However, in a recently decided case, the court instructed an "action on a contract"

9 as used in Section 1717 refers to the "whole of a lawsuit", and not discrete proceedings within a lawsuit.

10 (de la Carriere v. Greene (2019) 39 Cal.App.5th 270, 276; see accord„Frog Creek Partners, LI.C v.

11 Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 527, fn. 6 [noting the weight of authorities identifying
12 an "action" as referable to the entire lawsuit]; Salavvy v. Ocean Towers Housing Corp. (2004) 121

13 Cal.App.4th 664, 672 — 674 [holding an 'action" refers to the lav suit as a whole]; massif v. Municipal
14 Court(1989) 214 Cal.App.3d 1294, 1298 [instructing an "action" refers to the eniire judicial
15 proceeding].)
16 As noted, supra, the "contract" upon which FPSI relies for Section 1717 fees and costs is the
17 Employment Agreement. The "action" on the Employment Agreement, i.e., the lawsuit thereon, was
18 initiated by the filing of the Petitioners'FA on January 25, 2018, and concluded with the issuance of
19 the Final Award on December 16, 2019. The "action" resulted in a determination of liability against
20 NVDC and SAVI, and in favor of Petitioners. The Final Award has been confirmed by this Court in its
21 entirety, and the only reason judgment has not yet been entered against NVDC is because of its
22 automatic bankruptcy stay. However, as noted, supra, on July 16, 2020, Judge Klein modified the stay
23 to permit Petitioners to seek entry of judgtnent against NVDC, and on August 13, 2020, judgment in
24 conformity with the Final Award was entered against NVDC by this Court. FPSI's efforts to re-litigate
25 the case notwithstanding, as a general partner of NVDC when the events which gave rise to the liability

26 transpired, NVDC's obligation to the Petitioners is imputed to FPSI as a matter of law. The fact that the
27 Court did not allow FPSI to the Judgment under Section 187 does not obviate this reality because FPSI's

{00097881.DOC; 1) 9
PETITIONERS'PPOSI1'ION TO FPSI'S MOTION FOR ATTORNEYS'EES
I liability for NVDC's obligations to the Petitioners may be established in a separate prnceedirtg. (Corp.
2 Code {j 16307+).)
3 The Motion to Amend was a discrete motion in equity seeking to hold NVDC's general partners
4 liable for NVDC's obligations to Petitioners based upon their partnership status, and to avoid the
5 necessity of having to file a separate proceeding. The Court's Order makes plain that a separate
6 proceeding will be required and that proceeding will be brought. Nonetheless, the Motion to Amend,
7 and the Court's Order thereon, had nothing to do with any rights or obligations under the terms of
8 Employment Agreement — those issues have been fully litigated and adjudged in favor of Petitioners and
9 against SAVI and NVDC. There is no basis in reason or law to rationally deem the Motion to Amend as
10 an "action" on the Employment Agreement. Indeed, had Petitioners succeeded on the aspect of the
11 Motion to Amend seeking to add FPSI as a judg{nent debtor under Section 187, they would not have
12 been entitled to an award of attorneys'ees by reason of that success because the Motion to Amend was

13 clearly not an "action on a contract," and the statute does not provide for such an award.
14 B. There May Only One "Prevailing Party" Under Section 1717.
15 Should the Court agree that the Motion to Amend did not constitute an "action" on the
16 Employment Agreement under Section 1717., there is no need for further inquiry — FPSI's Motion must
17 be denied. Still, it bears observing t

Case Info

Judge

Sandra L. McLean Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

August 20, 2020

Case Filing Date

December 31, 2019

County

Parties

Banks, James Joseph Attorney
Glynn, Clement Leo Attorneys for Defendants
On, Barbara Petitioner
On, Omar Jay Petitioner
Rapp, Adam Michael Attorneys for Defendants
Richey, Donald F Respondent
Sanders, Serena Mercedes Attorney
Shepherd, Michael Thomas Attorney
Stephen A Vannucci, MD, Inc Respondent
Stephen A. Vannucci, M.D., Inc. Respondent/defendant (participant)
Daniel Egan Attorneys for Defendants
Daniel Foster Attorneys for Defendants
William Corrick Attorneys for Plaintiffs
Patricia Savage Attorneys for Plaintiffs
Mark Serlin Attorneys for Plaintiffs
Richard Munzinger Attorneys for Defendants
Daniel Poniatowski Attorneys for Defendants
John Knowlton Attorney
Edmund Gee Attorney
Jason Blumberg Attorney
James Cunningham Attorney
Nicholas Kohlmeyer Attorney
Benjamin Tagert Attorney
Douglas Jacobs Attorneys for Defendants
Serena Warner Attorneys for Plaintiffs
John Whitesides Attorneys for Plaintiffs
Jason Rios Attorney
David Ongaro Attorney
Mark Habib Attorney
Scott Emerick Attorney
Stephen Aronow Attorney
Spencer Turpen Attorneys for Defendants
Jamie Dreher Attorney
Serena Murillo Attorney
Scott Galbreath Attorney
Steven Williamson Attorney
Samuel Feldan Attorneys for Plaintiffs
Michael Gill Attorneys for Plaintiffs

For full print and download access, please subscribe at https://www.trellis.law/.

Motion-Secondary: On, Omar Jay vs Stephen A Vannucci, MD, Inc et al

Preview

Related Topics

Case Info

Parties