Legendz Entertainment LLC et al v. Cam Specialty Lending 1 LTD et al
Filing
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ORDER DENYING DEFENDANT CRESCENDO CAPITAL S.A.'S MOTION FOR ATTORNEYS FEES 51 by Judge Otis D. Wright, II. (lc)
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United States District Court
Central District of California
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LEGENDZ ENTERTAINMENT, LLC et
al.,
Plaintiffs,
v.
CAM SPECIALTY LENDING 1, LTD et
al.,
Defendants.
Case No. 2:23-cv-03097-ODW (MARx)
ORDER DENYING DEFENDANT
CRESCENDO CAPITAL S.A.’S
MOTION FOR ATTORNEYS’ FEES
[51]
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I.
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INTRODUCTION
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Plaintiffs Legendz Entertainment, LLC and Cinematic, LLC (collectively,
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“Legendz” or “Plaintiffs”) filed this breach of contract action against Defendants
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Crescendo Asset Management LLC (“CAM LLC”), CAM Specialty Lending 1, Ltd.
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(“CAM Lending”), Brian Weiner (collectively, “CAM” or the “CAM Parties”), and
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Crescendo Capital S.A. (“Crescendo”). (Second Am. Compl. (“SAC”) ¶¶ 5–10, ECF
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No. 14.) The Court granted Crescendo’s motion to dismiss for lack of personal
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jurisdiction.
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attorneys’ fees. (Mot. Att’y’s Fees Mem. (“Motion,” “Fee Motion,” or “Fee Mot.”) 1,
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ECF No. 51.) For the reasons below, the Court DENIES Crescendo’s Motion.1
(Order Granting MTD 11, ECF No. 49.)
Crescendo now seeks its
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Having carefully considered the papers filed in connection with the Motion, the Court deemed the
matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15.
II.
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BACKGROUND
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In October 2022, Legendz verbally secured financing from the CAM Parties to
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promote a World Boxing Council sanctioned fight, scheduled for late November 2022.
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(Order Granting MTD 2.) The CAM Parties and Legendz signed a written agreement
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(the “Agreement”) outlining their respective obligations.
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included an attorneys’ fee-shifting provision that allows the prevailing party in a
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litigation enforcing the Agreement to recover its attorneys’ fees for that lawsuit. (See
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SAC ¶ 23, Ex. A (“Agreement”) ¶ 10.8, ECF No. 14-1.)
(Id.)
The Agreement
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After the CAM Parties failed to fund the fight as agreed, Legendz initiated this
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legal action against the CAM Parties and Crescendo for breach of the Agreement.
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(Order Granting MTD 2–3.) The CAM Parties and Legendz agreed to resolve their
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dispute through arbitration.
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However, Crescendo moved to dismiss Legendz’s claims due to lack of personal
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jurisdiction, as a foreign Swiss entity with no contacts in California. (Order Granting
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MTD 2, 5–10.) The Court agreed with Crescendo and dismissed it from the case. (Id.
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at 7, 10, 11.)
(Order Stay Pending Arbitration 2, ECF No. 24.)
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Crescendo now seeks its attorneys’ fees related to its motion to dismiss and the
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present Fee Motion. (Fee Mot. 1.) The Motion is fully briefed. (Opp’n Fee Mot.
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(“Opp’n”), ECF No. 57; Reply ISO Fee Mot. (“Reply”), ECF No. 58.)
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III.
LEGAL STANDARD
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Generally, each party bears the burden of its own attorneys’ fees unless a statute
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or private agreement provides otherwise. Bird v. Or. Comm’n for the Blind, 22 F.4th
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809, 815 (9th Cir. 2022) (citing Hardt v. Reliance Standard Life Ins. Co., 560 U.S.
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242, 253 (2010)). When a private agreement applies, a party may seek an award of
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attorneys’ fees from the Court pursuant to the terms of the agreement. Fed. R. Civ.
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P. 54(d)(2)(B) (“Rule 54”). A movant seeking attorneys’ fees pursuant to Rule 54
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must: (1) file a motion “no later than [fourteen] days after the entry of judgment;”
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(2) “specify the judgment and the statute, rule, or other grounds entitling the movant
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to the award;” (3) “state the amount sought or provide a fair estimate of it;” and
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(4) “disclose, if the court so orders, the terms of any agreement about fees for the
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services for which the claim is made.” Id.
IV.
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DISCUSSION
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Crescendo moves under Rule 54 for an order requiring Legendz to pay
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Crescendo’s attorneys’ fees related to its dismissal on the basis that Crescendo is the
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prevailing party in Legendz’s breach of contract litigation. (Fee Mot. 1–5.) Legendz
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primarily opposes the motion on three grounds: (1) the Court lacks jurisdiction to
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decide this issue; (2) Crescendo’s motion is untimely; and (3) Crescendo did not
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prevail in the underlying litigation and is therefore not entitled to recover its fees.
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(Opp’n 2–4.)
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A.
Jurisdiction
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Legendz and Crescendo both conflate subject matter and personal jurisdiction
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in their briefing, thus failing to offer clear or useful legal arguments on the issue. (See
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Opp’n 2; Reply 2–4.) As such, the Court independently analyzes its authority to rule
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on Crescendo’s Motion. See B.C. v. Plumas Unified Sch. Dist., 192 F.3d 1260, 1264
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(9th Cir. 1999) (“Federal courts are required sua sponte to examine jurisdictional
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issues . . . .”).
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Diversity subject matter jurisdiction, applicable here, exists where the parties
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are diverse in citizenship and the amount in controversy exceeds $75,000. (SAC ¶ 4);
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see 28 U.S.C. § 1332(a). Both Plaintiffs are incorporated and maintain principal
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places of business in California. (SAC ¶¶ 5–6); see 28 U.S.C. § 1332(c) (providing
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that a corporation is a citizen of its state of incorporation and its principal place of
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business). Weiner is domiciled in New York; and CAM Lending, a Cayman Islands
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corporation, and CAM LLC, a New York corporation, have principal places of
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business in New York. (SAC ¶¶ 7, 9–10); see Owens v. Huntling, 115 F.2d 160, 162
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(9th Cir. 1940) (providing an individual’s citizenship is where they are domiciled).
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Finally, Crescendo is a Switzerland corporation with a principal place of business in
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Switzerland. (SAC ¶ 9.) Thus, the parties are completely diverse in citizenship.
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Additionally, Legendz seeks over $1,000,000 in damages, which exceeds the
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jurisdictional threshold. (SAC ¶ 34.) Accordingly, the Court has diversity subject
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matter jurisdiction over this legal action.
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Legendz argues that the Court’s lack of personal jurisdiction over Crescendo
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precludes its consideration of Crescendo’s Fee Motion. (Opp’n 2.) Not so. “[I]t is
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well established that a federal court may consider collateral issues after an action is no
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longer pending.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990). “For
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example, district courts may award costs after an action is dismissed for want of
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jurisdiction.” Id. Correspondingly, federal courts routinely rule on attorneys’ fees
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motions following a personal jurisdiction dismissal. See Bautista v. Park W. Gallery,
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388 F. App’x 635, 636–37 (9th Cir. 2010) (affirming that district court did not abuse
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its discretion in ruling on attorneys’ fees request after dismissing movant for lack of
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personal jurisdiction); see also, e.g., Levine Leichtman Cap. Partners III, L.P. v.
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Shaker Constr. Grp., LLC, No. 2:08-cv-01252-DDP (Ex), 2008 WL 11336778, at *1–
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3 (C.D. Cal. June 10, 2008) (ruling on fee motion after dismissing movant for lack of
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personal jurisdiction).
Accordingly, although the Court lacks personal jurisdiction over Crescendo, the
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Fee Motion presents a collateral issue on which the Court is authorized to rule.
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B.
Timeliness
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Legendz argues that Crescendo’s Fee Motion, filed on June 19, 2024, was
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untimely because Crescendo filed it one day late, on June 20, 2024. (Opp’n 2.) Under
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Rule 54, a motion for attorneys’ fees must be filed within fourteen days of the
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triggering order. Fed. R. Civ. P. 54(d)(2)(B)(i). However, if a deadline falls on a
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legal holiday, the deadline extends to the next business day.
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P. 6(a)(1)(C). Juneteenth National Independence Day, a legal holiday, fell on June 19,
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2024, thereby extending Crescendo’s deadline to file a fee motion to June 20, 2024.
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5 U.S.C. § 6103(a). Thus, Crescendo timely filed its Fee Motion on June 20, 2024.
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Fed. R. Civ.
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C.
Prevailing Party on the Contract
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As noted, each party to a litigation generally bears its own attorneys’ fees
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unless a statute or contract provides otherwise. Bird, 22 F.4th at 815. Here, Legendz
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sued Crescendo for breach of the Agreement, which contains the following
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fee-shifting provision: “If any party to this Agreement commences an action against
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another party to this Agreement . . . the losing party shall pay the prevailing party’s
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reasonable outside attorneys’ fees.” (Agreement ¶ 10.8.) Crescendo relies on this
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provision to request attorney’s fees. (Fee Mot. 4–5.)
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As the Agreement allows the prevailing party to recover attorneys’ fees, and as
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the Court sits in diversity, the Court “must apply the substantive law of California” to
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determine whether Crescendo is the prevailing party under the Agreement. Karen
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Kane Inc. v. Reliance Ins. Co., 202 F.3d 1180, 1183 (9th Cir. 2000) (noting that a
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district court sitting in diversity must apply the law of the state in which it sits when
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deciding a contract dispute).
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(“Section 1717”), a party seeking recovery of attorneys’ fees must show that: (1) a
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contract authorizes such fees; (2) the moving party is the prevailing party; and (3) the
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fees incurred are reasonable. Cal. Civ. Code § 1717(a); see also, e.g., Johnston v.
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Lindauer, No. 2:07-cv-01280-GEB-EFB, 2010 WL 2850767, at *3–4 (E.D. Cal.
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July 20, 2010) (sitting in diversity and applying Section 1717 to determine movant’s
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claim to attorneys’ fees).
Under California Civil Code section 1717
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Crescendo contends it may recover attorneys’ fees based on the fee-shifting
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provision, (1) even though it is not a signatory to the Agreement, (2) because it is the
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prevailing party as a result of the Court’s order dismissing Crescendo from Legendz’
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action to enforce the Agreement. (Fee Mot. 5–9.)
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1.
Signatory to the Contract
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First, Crescendo argues that, although it is not a signatory, it may nevertheless
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seek fees pursuant to Section 1717 based on the Agreement’s fee-shifting provision.
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(Fee Mot. 5–6.) “When a contract contains a provision granting either party the right
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to recover attorney fees in the event of litigation on the contract . . . [Section 1717]
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gives the ‘party prevailing on the contract’ a right to recover attorney fees, whether or
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not that party is the party specified in the contract.” Hsu v. Abbara, 9 Cal. 4th 863,
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865 (1995); see also Mepco Servs., Inc. v. Saddleback Valley Unified Dist., 189 Cal.
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App. 4th 1027, 1046 (2010) (explaining Section 1717 extends this right to
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“nonsignatory” parties who successfully defend themselves in contract litigation).
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Thus, Crescendo, while not a named party to the Agreement, may nonetheless seek
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attorneys’ fees according to the fee-shifting provision because Legendz’s action
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forced Crescendo to defend itself as though it were a party to the Agreement.
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2.
Prevailing Party on the Contract
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Next, Crescendo contends that its success on the motion to dismiss for lack of
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personal jurisdiction makes it the prevailing party in the litigation. (Fee Mot. 6–9.)
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Under California law, the party prevailing on the contract “shall be the party who
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recovered a greater relief in the action on the contract.” Cal. Civ. Code § 1717(b)(1).
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However, “[t]he prevailing party determination is to be made only upon final
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resolution of the contract claims,” and “courts should respect substance rather than
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form.” Hsu, 9 Cal. 4th at 876–877.
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A “final resolution” must be a “simple, unqualified win.” Id. at 876. An
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“interim victory” is not a final resolution. Bautista, 388 F. App’x. at 636 (applying
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Cal. Civ. Code § 1717). Simply “moving a determination on the merits from one
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forum to another” achieves a procedural, rather than substantive, victory.
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DisputeSuite.com, LLC v. Scoreinc.com, 2 Cal. 5th 968, 975 (2017).
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have . . . rebuked a defendant’s efforts to recover attorney[s’] fees under
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[S]ection 1717 when the technical ground for dismissal was lack of [personal or
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subject matter] jurisdiction,” finding a final resolution must be more than a win based
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on “merely technical grounds.”
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(JPRx), 2019 WL 6974979, at *2 (C.D. Cal. Sept. 13, 2019). Procedural victories
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constitute final resolutions only in special circumstances where the claims cannot be
“[C]ourts
Nolte v. CEC Ent. Inc., No. 2:19-cv-02463-PA
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refiled, such as involuntary dismissals with prejudice or when the statute of limitations
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bars refiling a claim, making it “dispositive of the contractual dispute.”
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DisputeSuite.com, 2 Cal. 5th at 975, 981.
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Here, the Court granted Crescendo’s motion to dismiss based on lack of
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personal jurisdiction. (Order Granting MTD 11.) While Legendz has yet to refile
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their action against Crescendo, they may still do so in a proper forum. If Legendz
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refiles their claims in a suitable forum, the substantive contract issues—whether
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Crescendo breached a contractual obligation to Legendz—would then be decided.
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However, at present, the substantive contract issue remains unresolved. Accordingly,
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Crescendo’s win was merely a procedural interim victory, the contract claims are not
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finally resolved, and Crescendo is not a prevailing party entitled to attorneys’ fees
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under the Agreement.
V.
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CONCLUSION
For the reasons discussed above, the Court DENIES Crescendo’s Motion for
Attorneys’ Fees.
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IT IS SO ORDERED.
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October 25, 2024
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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE
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