Gonzalez et al v. Compass Vision Inc et al

Filing 350

ORDER (1) granting 346 Third-party Defendant Maximus Inc.'s Motion to Reopen Action and Enforce Stipulated Settlement; and (2) granting in part and denying in part Maximus's Request for Attorney's Fees. Judgment is in favor ofMaximus and against Compass in the amount of $308,855.75. Signed by Judge Anthony J. Battaglia on 11/25/13. (cge)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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MAGDA GONZALEZ, et al.,

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Plaintiff, )
v.
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COMPASS VISION, INC., et al.,
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Defendants. )
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And all related cases.
_______________________________ )

Case No. 07cv1951 AJB (WMC)
ORDER:
(1) GRANTING THIRD-PARTY
DEFENDANT MAXIMUS INC.’S
MOTION TO REOPEN ACTION
AND ENFORCE STIPULATED
SETTLEMENT; AND
(2) GRANTING IN PART AND
DENYING IN PART MAXIMUS’S
REQUEST FOR ATTORNEY’S FEES
(Doc. No. 346)

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On March 4, 2011, the Court approved a stipulated settlement agreement (“Settle-

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ment Agreement”) between Third-Party Plaintiff Compass Vision, Inc. (“Compass”) and

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Third-Party Defendant Maximus, Inc. (“Maximus”), and retained jurisdiction to enforce

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the Settlement Agreement. (Doc. No. 343.) Presently before the Court is Maximus’s

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motion to reopen the action, enforce the Settlement Agreement, and award Maximus its

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attorney’s fees incurred in enforcing the Settlement Agreement. (Doc. No. 346.) To

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date, Compass has not filed an opposition to Maximus’s motion. In accordance with

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Civil Local Rule 7.1.d.1, the Court finds the motion suitable for determination on the

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papers and without oral argument. For the reasons set forth below, the Court GRANTS

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Maximus’s motion to reopen the action and enforce the Settlement Agreement, and

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GRANTS IN PART AND DENIES IN PART Maximus’s request for attorney’s fees.

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(Doc. No. 346.)
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07cv1951 AJB (WMC)

BACKGROUND

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The underlying action relates to a contract dispute between Maximus and Compass

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regarding the administration of the California Department of Consumer Affairs’

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Diversion Program (“Diversion Program”). (Doc. No. 81 at 2.) Pursuant to a subcontract

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between the parties, Maximus served as the administrator of the Diversion Program, and

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retained Compass as a third-party administrator responsible for Diversion Program

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participants’ drug and alcohol testing. (Doc. No. 103-3 at 2.) On October 5, 2007,

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several Diversion Program participants filed claims against Compass for negligence.

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(Doc. No. 1.) Thereafter, Compass filed third-party claims against Maximus for breach

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of contract, contractual indemnity, equitable indemnity and contribution, and declaratory

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relief. (Doc. No. 85.) On October 5, 2010, the Court granted summary judgment in favor

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of Maximus on each of Compass’s third-party claims, and on March 3, 2011, Maximus

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moved for attorney’s fees pursuant to its subcontract with Compass. (Doc. No. 331-1 at

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7.)

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On March 17, 2011, the parties executed the Settlement Agreement currently at

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issue, which specified that Compass would pay Maximus $300,000.00 in attorneys’ fees

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over the course of the next seven years. (Doc. No. 339 at 3:27-4:6.) In the event

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Compass failed to pay according to the terms set forth in the Settlement Agreement,

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Maximus had the right to recover the full amount due and owing under the Settlement

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Agreement, and to recover all attorney’s fees incurred in enforcing the Settlement

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Agreement. (Id. at 5:23-27.) The Court approved the Settlement Agreement on March

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24, 2011. (Doc. No. 343 at 2.)

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LEGAL STANDARD

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“[I]t is . . . well settled in the usual litigation context that courts have inherent

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power summarily to enforce a settlement agreement with respect to an action pending

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before it; the actual merits of the controversy become inconsequential.” Dacanay v.

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Mendoza, 573 F.2d 1075, 1078 (9th Cir. 1978) (citations omitted); see also Callie v.

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Near, 829 F.2d 888, 890 (9th Cir. 1987) (“It is well settled that a district court has the
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07cv1951 AJB (WMC)

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equitable power to enforce summarily an agreement to settle a case pending before it.”);

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In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994) (affirming summary

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enforcement of settlement agreement by bankruptcy court where there was no dispute

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about the formation or consummation of the agreement). “The authority of a trial court to

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enter a judgment enforcing a settlement agreement has as its foundation the policy

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favoring the amicable adjustment of disputes and the concomitant avoidance of costly

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and time consuming litigation.” Dacanay, 573 F.2d at 1078 (citation omitted). To be

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enforced, a settlement agreement must be complete and both parties must have agreed to

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the terms of the settlement. See Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th

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Cir. 1994).
“Enforcement of a settlement agreement . . . is more than just a continuation or

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renewal of the dismissed suit, and hence requires its own basis for jurisdiction.”

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Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994). A district court

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lacks jurisdiction to enforce a settlement agreement following a dismissal of the action

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unless the district judge either: (1) expressly in the dismissal order, retains jurisdiction

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over the settlement agreement; or (2) incorporates the terms of the settlement agreement

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in the dismissal order. Id. at 381. If the court does not retain jurisdiction to enforce the

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settlement agreement, the vehicle for the enforcement of the settlement agreement is a

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breach of contract claim in another proceeding, where “part of the consideration [for the

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contract] was dismissal of an earlier federal suit.” Id.

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“[W]here material facts concerning the existence or terms of an agreement to settle

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are in dispute, the parties must be allowed an evidentiary hearing.” Callie v. Near, 829

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F.2d 888, 890 (9th Cir. 1987) (holding that district court erred in granting entry of

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judgment without first holding requested evidentiary hearing after plaintiffs requested

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evidentiary hearing challenging the existence and validity of the settlement agreement).

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However, an evidentiary hearing is not required where the settlement agreement itself is

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not disputed. See, e.g., Calcor Space Facility, Inc. v. McDonnell Douglas Corp., 5 F.

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App’x 787, 789 (9th Cir. 2001) (district court did not err in enforcing settlement
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agreement where no party requested evidentiary hearing, court held hour-long hearing on

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motion to enforce the settlement agreement and considered detailed memoranda and

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declarations from several people, and no parties requested cross-examination of any of

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the declarants); Situ v. Northrop Grumman Corp., 49 F. App’x 185 (9th Cir. 2002).
DISCUSSION

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I.

Motion to Enforce the Settlement Agreement
Maximus’s instant motion seeks to enforce the Settlement Agreement pursuant to

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Paragraph 10 of the Agreement, which states that the Court retains jurisdiction to enforce

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the terms of the Settlement Agreement until all payments have been made. As a result,

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because Compass has not made a payment since December 21, 2012, Maximus seeks a

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court order requiring Compass to pay $297,950.00, the total amount still due and owing.

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(Doc. No. 346.) Compass does not oppose the Court’s continuing jurisdiction to enforce

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the Settlement Agreement or the total amount requested by Maximus.

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As the parties expressly provided for the Court’s continuing jurisdiction over any

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claims and disputes arising from the Settlement Agreement, and there is no dispute as to

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the material facts concerning the formation, existence, or terms of the Settlement

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Agreement, the Court finds it has jurisdiction over the motion and may entered the

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requested judgment to the extent provided for in the Agreement. See, e.g., Tranquilli v.

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VSB Investments, Inc., No. 07–cv–433 LJO, 2008 WL 1788022, at *2 (E.D. Cal. Apr. 18,

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2008) (granting motion to enforce settlement agreement where parties stipulated to the

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court’s jurisdiction to enforce the agreement, defendants failed to make monthly

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payments under agreement, such failure accelerated the total sum owed, and defendants

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did not oppose motion); U.A. Local 342 Joint Labor–Mgmt. Comm. v. S. City

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Refrigeration, Inc., No. 09–cv–3219 JCS, 2010 WL 1293522, at *2-4 (N.D. Cal. Mar. 31,

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2010) (granting motion to reopen case and enter judgment against defaulting defendant

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where stipulated entry of judgment provided that judgment shall be entered against

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defendant if it defaulted under the settlement agreement).

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Pursuant to Paragraph 1 of the Settlement Agreement, Compass was required to
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pay Maximus $300,000.00 over seven years, which was dictated by the following

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payment schedule:

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$1,000.00 by the fifth day of each month starting from January 5, 2012 and

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ending on December 5, 2013;

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$3,000.00 by the fifth day of each month starting from January 5, 2014 and

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ending on December 5, 2014;

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$5,000.00 by the fifth day of each month starting from January 5, 2015 and

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ending on December 5, 2018.

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(Doc. No. 339 at 3:27-4:6.) The Settlement Agreement further provided that in the event

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Compass failed to make the specified payment by the tenth day of any month, payment

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would be considered late. (Id. at 4:11-13.) The parties agreed that Compass would be

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assessed a late payment penalty of 5% of the unpaid balance owed for that payment

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period the first time a payment was late, and a 15% late payment penalty for every

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subsequent late payment. (Id. at 4:14-21.)

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Finally, in the event payment was not received by the tenth day of the month, the

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Settlement Agreement provided Compass until the fifth day of the following month to

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tender payment in full, including accrued penalties. (Id. at 4:22-5:1.) If Compass failed

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to tender the full amount of the specific payment by this date, pursuant to Paragraph 6,

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Compass would be considered “in full default” and was required to tender the entire

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amount due and owing under the Settlement Agreement immediately. (Id. at 5:5-9.) The

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Settlement Agreement further provided that the parties had to make a good faith effort to

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resolve any disputes arising under the Settlement Agreement before seeking judicial

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enforcement. (Id. at 5:18-22.)

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Based on the above, the Court finds Compass is in breach of the Settlement

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Agreement and Maximus is entitled to judgment in the amount of $297,950.00. This

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amount accounts for payments already received from Compass ($5,100.00) and all

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accrued late penalties ($3,050.00). (Doc. No. 346-2 at 21.) Accordingly, the Court

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GRANTS Maximus’s motion to reopen the case and enforce the Settlement Agreement,
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and enters judgment in favor of Maximus in the amount of $297,950.00, plus attorney’s

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fees as discussed below.

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II.

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Maximus’s Request For Attorney’s Fees
Maximus also requests an attorney fee award for its enforcement efforts, which is

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explicitly provided for in Paragraph 9 of the Settlement Agreement.1 (Doc. No. 339 at

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5:23-27.) Under California law, “where the contract specifically provides that attorney’s

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fees and costs shall be awarded . . . to the prevailing party, then the party who is

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determined to be the prevailing party . . . shall be entitled to reasonable attorney’s fees in

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addition to other costs.” Cal. Civ. Code § 1717(a). Because the Court has already

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determined Maximus to be the prevailing party, the Court must only address the

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reasonableness of the requested fees.

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A.

Reasonableness of Attorney’s Fees

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In calculating reasonable attorneys’ fees, courts consider the following factors: (1)

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the time and labor required; (2) the novelty and difficulty of the questions involved; (3)

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the skill necessary to perform the legal services properly; (4) the preclusion of other

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employment by the attorney due to acceptance of the case; (5) the customary fee; (6)

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whether the fee is fixed or contingent; (7) time limitations imposed by the client or

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circumstances; (8) the amount involved and the results obtained; (9) the experience,

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reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the

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nature and length of the professional relations with the client; and (12) awards in similar

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cases. LaFarge Conseils et Etudes, S.A., 791 F.2d at 1341-42. “The matter of

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reasonableness of attorney’s fees is within the sound discretion of the trial judge.” Stokes

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v. Marsh, 217 Cal. App. 3d 647, 656 (Cal. Ct. App. 1990); see also Martinez v. Idaho

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First Nat’l Bank, 755 F.2d 1376, 1378 (9th Cir. 1985) (finding that a complete failure to

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Paragraph 9 of the Settlement Agreement provides: “It is further understood and
agreed by the Parties that, subject to the provisions of sections 7 and 8, if at any time a
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violation of any term of this Agreement is asserted by any Party hereto, that Party shall
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and proper relief, and the prevailing party shall be entitled to recover its reasonable costs
and attorneys’ fees.” (Doc. No. 339 at 5:23-27.)
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consider these guidelines constitutes an abuse of discretion).
Here, Maximus seeks a total of $18,372.60 in attorney’s fees and costs for the 55.6

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hours that its attorney, Jeremy Meier (“Meier”) and his paralegal, Deborah Killion

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(“Killion”) incurred in enforcing the Settlement Agreement. (Doc. No. 346-1 at 2.) This

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amount includes time spent contacting Compass and Maximus regarding enforcement of

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the Settlement Agreement, attempting to collect delinquent payments, drafting the motion

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to enforce the Settlement Agreement, composing a reply brief, and preparing for and

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attending oral argument.2 (Doc. No. 346-2 at 41-43.) Maximus submitted a thorough

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billing statement in support, including precise time records, detailed task descriptions,

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and the resulting billable amounts. (Id.) The billing statement reflects an hourly rate of

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$517.50 for Meier, and an hourly rate of $193.50 for Killion. (Id.) The Court does not

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dispute that these rates are within the range of what may be considered reasonable, even

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though both Meier and Killion’s rates are at or near the higher end, as there is sufficient

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evidence of experience and expertise. (Id. at 2-5.) Therefore, the Court only considers

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whether the time spent preparing the instant motion and the time spent corresponding

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with Compass and Maximus was reasonable.
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Preparing the Instant Motion

Of the 55.6 total hours requested, Maximus alleges that Meier and Killion spent a

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combined 42.9 hours drafting the instant motion to enforce the Settlement Agreement.

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(Doc. No. 346-2 at 41-43.) Broken down even farther, of the 42.9 total hours, Maximus

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contends that Meier spent 10.8 hours ($5,589.00) researching, writing, and revising the

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motion, and that Killion spent 32.1 hours ($6.211.35) drafting/revising the motion and

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preparing the exhibits. (Id.) This equates to a total of $11,800.35 in requested fees in

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preparing the instant motion to enforce the Settlement Agreement. Such amount is

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unreasonable. Although the Court is cognizant that this motion is related to a complex

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case, the motion itself—a motion to enforce a stipulated Settlement Agreement—is not

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Maximus may not recover attorney’s fees for the 6 hours Meier estimated it
would take to prepare the reply brief and attend the motion hearing because Compass did
not file an opposition, and the Court vacated the motion hearing.
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complex. Accordingly, the Court GRANTS IN PART AND DENIES IN PART

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Maximus’s request and finds fees in the amount of $7,438.50 reasonable to prepare the

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instant motion.3
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Contacting Compass and Maximus

Meier further alleges that he spent 5.8 hours attempting to contact Compass, and

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0.9 hours communicating with Maximus regarding enforcement strategy. (Doc. No. 346-

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2 at 41-43.) The Court does not take issue with the requested fees, and finds these hours

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necessary and appropriate in light of the specific provisions in the Settlement Agreement

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requiring such good faith efforts. Accordingly, the Court GRANTS Maximus’s request

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for $3,467.25 in fees incurred in contacting Compass and communicating with Maximus.4

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CONCLUSION

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For the reasons set forth above, the Court GRANTS Maximus’s motion to reopen

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the case and enforce the Settlement Agreement, and GRANTS IN PART AND DENIES

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IN PART Maximus’s request for attorney’s fees. (Doc. No. 339.) Accordingly, the

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Court awards Maximus $297,950.00 as the accelerated amount presently due and owing

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under the Settlement Agreement, and $10,905.75 in attorney’s fees incurred to enforce

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the Settlement Agreement. The Clerk of Court is instructed to enter judgment in favor of

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Maximus and against Compass in the amount of $308,855.75.

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IT IS SO ORDERED.

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DATED: November 25, 2013

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Hon. Anthony J. Battaglia
U.S. District Judge

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The Court finds Meier reasonably expended 5.4 hours ($2,794.50) as opposed to
10.8 hours, and that Killion reasonably expended 24 hours ($4,644.00) as opposed to
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6.7 (5.8 + 0.9) multiplied by the reasonable rate ($517.50) equals $3,467.25.
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