Judge: Curtis A. Kin, Case: 18STCP02482, Date: 2023-02-07 Tentative Ruling

Case Number: 18STCP02482    Hearing Date: February 7, 2023    Dept: 72

MOTION TO STRIKE OR TAX COSTS

Date:            2/7/23 (8:30 AM)                   

Case:           Sergio Larios v. Specialized Loan Servicing LLC et al. (18STCP02482)

TENTATIVE RULING:

Plaintiff Sergio Larios’ Motion to Strike or Tax Costs is DENIED.

Plaintiff Sergio Larios moves to strike or tax the costs claimed by defendant WF Victoria Grantor Trust 2016-3 (“Victoria Trust”).

In the operative Third Amended Complaint, the only causes of action against Victoria Trust were the second cause of action for Violation of Business & Professions Code § 17200 and the third cause of action for Negligence. On August 13, 2021, the Court dismissed these causes of action on summary adjudication. (8/13/21 Minute Order.) On October 12, 2022, the Court entered judgment in favor of Victoria Trust as to the second and third causes of action. (Grant Decl. ¶ 12 & Ex. 7.) On December 15, 2022, the Court entered an amended judgment in favor of Victoria Trust as to the second and third causes of action. (Grant Decl. ¶ 13 & Ex. 8.)

Further, the Court notes that plaintiff sought leave to file a Fourth Amended Complaint to add Victoria Trust to the first cause of action for Violation of the California Consumer Credit Reporting Agencies Act. On May 3, 2022, the Court denied the motion. (Grant Decl. ¶ 11 & Ex. 6.) 

Plaintiff contends that Victoria Trust is not a prevailing party, because under the Judgment and Amended Judgment, the other defendant Specialized Loan Servicing LLC (“SLS”), the servicer and agent of loan holder Victoria Trust, is enjoined from foreclosing upon or assisting in the foreclosure of the subject property. (See Grant Decl. ¶¶ 12, 13 & Exs. 7, 8 [paragraph 2 of Judgment and Amended Judgment].) According to plaintiff, Victoria Trust did not achieve its objective of foreclosing on the property.

The definition of “prevailing party” includes a “defendant as against those plaintiffs who do not recover any relief against that defendant.” (CCP § 1032(a)(4).) Here, plaintiff did not obtain any relief against Victoria Trust. Judgment was entered in favor of Victoria Trust.

In response to this straightforward and common sense application of the “prevailing party determination, plaintiff refers to the second sentence of the definition of “prevailing party,” which states: “If any party recovers other than monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.” (CCP § 1032(a)(4).) While plaintiff obtained other relief in the form of an injunction against foreclosure, this is not a “situation[] other than as specified,” as such injunction was only against SLS, not Victoria Trust.

Indeed, on April 8, 2022, the Court dissolved the preliminary injunction against Victoria Trust, stating “WF Victoria Grantor Trust 2016-3 is no longer a party to this action, and cannot be enjoined from foreclosing upon, selling, or transferring the Property.” (Grant Decl. ¶ 10 & Ex. 5.) Plaintiff maintains that Victoria Trust is nevertheless “effectively enjoined” because the judgment prevents SLS from transferring the loan to another servicer. (Reply at 3:13-16.) That conclusion about Victoria Trust is not necessarily true, and plaintiff fails to show how Victoria Trust is prevented from foreclosing on the loan itself as the principal, without the assistance of any agent (or with the assistance of some agent other than SLS).

Under these circumstances, Victoria Trust is entitled to claim costs as a defendant against whom plaintiff did not obtain any relief. (CCP §§ 1032(a)(4), (b).)

Plaintiff also argues that SLS was contractually obligated to indemnify Victoria Trust for the failure to furnish accurate information on plaintiff’s credit files, as required under the “Flow Servicing Agreement.” (Brennan Decl. ¶ 9 & Ex. B at §§ 5.01(a), 7.01(a).) Under CCP § 1032(c), there is “no requirement that the party claiming costs must have personally incurred the obligation enumerated in the memorandum.” (Litt v. Eisenhower Medical Center (2015) 237 Cal.App.4th 1217, 1222; see also Cell-Crete Corp. v. Federal Ins. Co. (2022) 82 Cal.App.5th 1090, 1095-96 [agreeing with Litt]; Ceranski v. Muensch (1943) 60 Cal.App.2d 751, 754 [stating that defendants “incurred legal liability to pay the costs of litigation even though some other party may have agreed to reimburse them….”].)

Plaintiff argues that the line of cases set forth above involves a principal who was obligated to pay the costs of a surety or an insurer who was obligated to pay the costs of an insured. Plaintiff’s attempt to distinguish the cases is unavailing. In Ceranski, the Court of Appeal found that the prevailing defendants were entitled to recover costs even though the costs were paid by their insurance company. (Ceranski, 60 Cal.App.2d 751, 754.) The Court of Appeal stated: “It must be taken for granted that defendants expended a sum of money to procure the insurance policy by which the insurance carrier agreed to pay the costs of the defense of an action brought against them for damages. The fact that defendants thus procured the means of defending themselves in actions of this character does not furnish an avenue for plaintiffs to escape the obligation which they incurred when they unsuccessfully attempted to collect damages from defendants by an action at law.” (Id. at 754-55.)

Similarly, it must be taken for granted that Victoria Trust compensates SLS for servicing its loans, which resulted in SLS’s agreement to indemnify Victoria Trust. (See Brennan Decl. ¶ 9 & Ex. B at § 9.01(b) [providing for payment of unpaid “Subservicing Fees” to SLS in event that Victoria Trust terminates Flow Servicing Agreement].) Plaintiff cannot escape its obligations to pay Victoria Trust’s costs, which it incurred by unsuccessfully asserting causes of action against Victoria Trust that were federally preempted. (Grant Decl. ¶ 9 & Ex. 4.)

For the foregoing reasons, even if SLS were obligated to pay Victoria Trust’s costs, this would not prevent Victoria Trust from recovering those costs against plaintiff.

Plaintiff argues that, even if Victoria Trust can recover costs against plaintiff, Victoria Trust has not demonstrated that it (as opposed to SLS) incurred the costs set forth in Victoria Trust’s memorandum of costs. When the charges in a memorandum of costs appear to be proper, the initial burden on a motion to a tax costs “is on the party seeking to tax costs to show they were not reasonable or necessary.” (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774.) The costs set forth in the memorandum appear to be proper, as they are costs that are expressly recoverable under CCP § 1033.5(a). Accordingly, the burden shifts to plaintiff to demonstrate why the costs claimed by Victoria Trust are not reasonable or necessary.

In the motion, plaintiff makes the generalized argument that SLS incurred the costs set forth in the memorandum. (Mtn. at 5:9-13; see County of Kern v. Ginn (1983) 146 Cal.App.3d 1107, 1113-14 [finding that defendant did not meet initial burden on motion to tax costs, stating “Defendant merely alleged that the depositions were neither necessary nor reasonable under the circumstances”].) Plaintiff does not explain why Victoria Trust could not have also incurred the costs along with SLS. Plaintiff does not provide evidence that only SLS incurred the costs set forth in the memorandum. (Id. at 1113 [“In this case defendant submitted no affidavits in support of her motion to tax costs”].) Accordingly, the burden never shifted to Victoria Trust to demonstrate the reasonableness or necessity of the costs.

For the foregoing reasons, the motion is DENIED.