Unreported / Non-Citable
Background
Siry Investments, L.P. and the appellants formed a limited partnership in 1998 to renovate and lease space in a mixed-use downtown Los Angeles building. Siry sued Saeed Farkhondehpour, 415 South Wall Street, Inc., and Morad Neman in 2007, alleging underpayment and diversion of partnership rental income. A 2009 jury verdict favored Siry, but the judgment was reversed in 2012 because the special verdict form did not require the jury to specify whether liability was individual or as trustees. Following remand, discovery-order violations led to terminating sanctions, stricken answers, and a default judgment exceeding $12 million. A new-trial motion later reduced total damages to $7,066,579.10, and further appellate proceedings addressed the sanctions, standing, damages, and the availability of remedies under Penal Code section 496(c).
In 2022, the California Supreme Court concluded that section 496(c) permits treble damages and attorney fees in this case. The Court of Appeal subsequently reinstated those remedies, while directing that $376,437 attributable to a prior lawsuit be stricken. Siry then sought $4,274,982 for postjudgment work by Robert Cooper and Gregory Hagen, including $993,033 for Hagen's contingency-based services and a 1.6 multiplier. In June 2024, the trial court awarded $4,268,597.97 after reducing the request for clerical tasks and duplicative billing. It found Siry would be the prevailing party even if section 496(c) imposed that requirement, accepted the contingency-fee request, approved the multiplier, and allowed fees for the interim appeal. The appellants challenged those determinations on appeal.
The Court’s Holding
The Court of Appeal affirmed the prevailing-party determination and the award of fees for Siry's unsuccessful cross-appeal. It explained that section 496(c) fees are tied generally to litigating the statutory claim, rather than success in a particular appeal. Siry retained a favorable judgment, established the statute's applicability, and obtained significant appellate successes. The cross-appeal concerned the appellants' standing to seek a new trial challenging section 496 remedies, so the trial court could reasonably treat that work as part of litigating the claim even though Siry did not prevail on standing. The court also upheld the 1.6 multipliers, citing the novelty and difficulty of the appellate issues, the significance of the Supreme Court victory, Hagen's extensive case knowledge and contributions, and evidence concerning Cooper's representation. It rejected challenges involving the Neman parties for inadequate record support, speculative settlement assertions, and forfeiture, and found no abuse of discretion in the treatment of the declined settlement offer or the extended fee-motion deadline.
The court reached a different result for Hagen's contingency-based compensation. Because section 496(c) does not expressly authorize an alternative calculation method, the lodestar method—reasonable hours multiplied by a reasonable hourly rate—was required. Although the trial court credited Hagen's declaration, nothing showed that it considered hours and hourly rates for those services. The disposition therefore reversed the June 13, 2024 order only as to Hagen's contingency fees and directed the trial court to vacate that award and enter a new lodestar-based order. The remaining rulings were affirmed, each party was ordered to bear its own appellate costs, and the court left unresolved whether section 496(c) contains a prevailing-party requirement. In a separate October 13, 2026 order, the court deleted footnote 6 from the September 23 opinion, denied rehearing, and made no change in the judgment.
Key Takeaways
- Statutory attorney fees for Hagen's contingency-based services must be recalculated using reasonable hours and reasonable hourly rates under the lodestar method.
- The reversal is limited to that contingency-fee award; the trial court's remaining fee determinations, including the 1.6 multipliers, were affirmed.
- An unsuccessful cross-appeal can support compensable fees when the work was reasonably necessary to litigate the underlying statutory claim.
- The court did not decide whether Penal Code section 496(c) independently requires a prevailing party because Siry qualified under the trial court's practical-success analysis.
- The later modification deleted footnote 6 and denied rehearing without changing the judgment or the directed remand.
Why It Matters
The decision distinguishes the method for setting the base statutory fee from the discretionary enhancement of that fee. A private contingency percentage cannot substitute for lodestar findings under section 496(c), yet contingency risk, difficult legal questions, preclusion from other work, and high-quality representation may still support a multiplier once the proper base is established. The remand therefore concerns calculation rather than a wholesale rejection of Hagen's compensation.
The opinion also takes a practical view of appellate fee recovery. Partial appellate losses, a reduced judgment, or an unsuccessful cross-appeal do not automatically defeat prevailing-party status or make related hours noncompensable. At the same time, the court's treatment of the Neman-related objections underscores that appellants must identify supporting billing records and preserve discovery and settlement issues in the trial court rather than rely on speculation.