Judge Elaine Lu, Case Number: 19STCV28356, Date: 2024-02-29 Tentative Ruling

On August 9, 2019, Plaintiff Creditcard Data Services, Inc. (“Plaintiff”) filed the instant action against defendant Hyunmok Cho also known as Hank Cho (“Defendant”). The complaint asserted two causes of action for (1) Breach of Written Contract, and (2) Statutory Misappropriation of Trade Secrets.

On February 7, 2023, at the conclusion of a jury trial, the jury found in favor of Defendant. (Special Verdict 2/7/23.) On May 18, 2023, the Court entered judgment in favor of Defendant pursuant to the jury’s special verdict. (Judgment 5/18/23.)

On September 26, 2023, Defendant filed a memorandum of costs. On October 11, 2023, Plaintiff filed the instant motion to strike costs. On January 31, 2024, Defendant filed an opposition to Plaintiff’s motion to strike costs. On February 22, 2024, Plaintiff filed a reply. On February 27, 2024, Defendant filed a surreply.[1]

“A prevailing party is entitled ‘as a matter of right’ to recover costs in any action or proceeding unless a statute expressly provides otherwise.” (Segal v. ASICS America Corp. (2022) 12 Cal.5th 651, 658.) “Section 1033.5 sets forth the types of expenses that are and are not allowable as costs under section 1032. Specifically, subdivision (a) of section 1033.5 describes items that are ‘allowable as costs,’ subdivision (b) describes items ‘not allowable as costs, except when expressly authorized by law,’ and section 1033.5(c)(4) provides that ‘[i]tems not mentioned in this section and items assessed upon application may be allowed or denied in the court's discretion.’” (Ibid.)

To recover a cost, it must be reasonably necessary to the litigation and reasonable in amount. (Perko’s Enterprises, Inc. v. RRNS Enterprises (l992) 4 Cal.App.4th 238, 244.) If the items appearing in a cost bill appear to be proper charges, the burden is on the party seeking to tax costs to show that they were not reasonable or necessary. (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-74.) On the other hand, if the items are properly objected to, they are put in issue, and the burden of proof is on the party claiming them as costs. (Id.)

Plaintiff asserts that the memorandum of costs is untimely and therefore must be stricken.

“A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of service of the notice of entry of judgment or dismissal by the clerk under Code of Civil Procedure section 664.5 or the date of service of written notice of entry of judgment or dismissal, or within 180 days after entry of judgment, whichever is first.” (Cal. Rules of Court, Rule 3.1700(a).) Additionally, “the court may extend the times for serving and filing the cost memorandum … for a period not to exceed 30 days.” (Cal. Rules of Court, Rule 3.1700(b)(3).)

Here, judgment was entered on May 18, 2023. (Kim Decl. ¶ 4, Exh. 3.) Notice of entry of judgment was provided the same day by mail by the Clerk. Because the Clerk effected service by mail, there is a five-calendar day extension. (CCP § 1013(a).) The last day for Defendant to file a timely memorandum of costs was June 7, 2023. Thus, the memorandum of costs filed on September 26, 2023 is clearly untimely.

Because the memorandum of costs is untimely, Plaintiff contends that the memorandum of costs must be stricken pursuant to Hydratec, Inc. v. Sun Valley 260 Orchard & Vineyard Co. (1990) 223 Cal.App.3d 924. In opposition, Defendant contends that (1) Plaintiff’s new trial motion excused the untimely filing of the memorandum of costs, (2) the appeal stayed the action including the requirement to timely file a memorandum of costs, and (3) the memorandum of costs is not untimely pursuant to Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116.

Defendant’s contention that Plaintiff’s new trial motion somehow excused the untimeliness of Defendant’s memorandum of costs is unsupported. Though Defendant may have been preoccupied responding to Plaintiff’s new trial motion, Defendant does not cite any authority – nor is the court aware of any authority – indicating that a new trial motion excuses the time requirement for filing a memorandum of costs. Nor does Defendant provide any explanation why a motion for new trial would affect the deadline to file a memorandum of costs.

Defendant’s second contention is that the appeal stayed the memorandum of costs. “‘[T]he perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order....’ The first exception to this general principle is set forth in Code of Civil Procedure section 917.1, which states that the taking of an appeal shall not stay enforcement of a judgment or order if it is ‘for money or directs the payment of money....’ A judgment for costs only is not deemed a money judgment within the meaning of Code of Civil Procedure section 917.1, on the rationale that any other construction would essentially negate the automatic stay provisions of Code of Civil Procedure section 916, since virtually all judgments routinely award costs to the prevailing party.” (Nielsen v. Stumbos (1990) 226 Cal.App.3d 301, 303–304.) Thus, the automatic stay would apply upon perfecting of the appeal.

However, here, notice of the appeal was not given until August 4, 2023 – well after the June 7, 2023 deadline to file a timely memorandum of costs. Accordingly, the deadline for filing a memorandum of costs had already lapsed, and any stay pending the appeal is irrelevant.

The Untimeliness of the Memorandum of Costs Does Not Necessitate Striking the Memorandum of Costs

Pursuant to Hydratec, Inc. v. Sun Valley 260 Orchard & Vineyard Co. (1990) 223 Cal.App.3d 924, Plaintiff contends that the Court must strike the untimely memorandum of costs. The Court disagrees.

In Hydratec the Fifth District Court of Appeal noted in relevant part that “[t]he time provisions relating to the filing of a memorandum of costs, while not jurisdictional, are mandatory.” (Hydratec, supra, 223 Cal.App.3d at p.929.) While this impliedly indicates that an untimely memorandum of costs must be stricken, Hydratec – notably – did not involve an untimely memorandum of costs. Rather, the Hydratec Court found that the trial court properly denied costs and attorney fees because the party claiming entitlement to fees and costs filed neither a memorandum of costs nor a fee motion. (Id. at pp.226-229.) Thus, Hydratec is not authority supporting the striking of an untimely filed memorandum of costs. (Los Angeles County Metropolitan Transportation Authority v. Yum Yum Donut Shops, Inc. (2019) 32 Cal.App.5th 662, 673, [“ ‘Cases are not authority for propositions not considered.’ ”].)

Though not cited by Plaintiff, some cases do hold that the court cannot consider a memorandum of costs filed after the time limits as set forth in Bankes v. Lucas (1992) 9 Cal.App.4th 365, Nazemi v. Tseng (1992) 5 Cal.App.4th 1633. Each of these cases “were decided under an earlier version of [former Rule 8.70.2 which is now Rule 3.1700], which required a motion for attorney fees to be “served and filed before or at the same time the memorandum of costs is served and filed.” (Lee v. Wells Fargo Bank, N.A. (2001) 88 Cal.App.4th 1187, 1197.) The relevant language of the earlier version of the Rule was similar “provid[ing], as it does today, that memoranda of costs were generally to be filed within 15 days after the date of mailing notice of entry of judgment … [and] permit[ing] the court to extend time for a period not to exceed 30 days.” (Ibid.) “In Bankes and Nazemi, the motions for fees were not filed at the same time as the costs memoranda and were filed long after the 30 days available to the court to extend time, even had it found good cause to do so. This formed the basis for the court's holdings in those two cases.” (Lee, supra, 88 Cal.App.4th at p.1197 [summarizing Bankes and Nazemi].) Thus, “[t]he holdings in … Bankes, and Nazemi support the proposition that a costs memorandum which is filed more than 50 days after notice of entry of judgment cannot be considered.

However, in Pollard v. Saxe & Yolles Dev. Co. (1974) 12 Cal.3d 374 (Pollard), where ‘defendants moved for permission to file a late memorandum of costs on the ground that due to the press of other matters counsel inadvertently failed to file a timely memorandum,’ the Supreme Court held: ‘In the absence of prejudice, the trial court has broad discretion in allowing relief on grounds of inadvertence from a failure to timely file a cost bill.’ (Id. at pp. 380–381.) The holding in Pollard was followed in Hoover Community Hotel Development Corp. v. Thomson (1985) 168 Cal.App.3d 485, where the court held: ‘[W]e deem it settled that the time limitation set out in [former statute governing time to file cost bill] is likewise not jurisdictional in character and that a trial court has broad discretion in allowing relief from a late filing where, as here, there is an absence of a showing of prejudice to the opposing party.’ (Id. at pp. 487–488.)’” (Lee, supra, 88 Cal.App.4th at p.1199.)

In Lee, the Second District Court of Appeal expressly did not address whether a trial court has discretion to grant an extension to file a memorandum of costs 50 days after judgment under the relevant rules of court. (Lee, supra, 88 Cal.App.4th at p.1199, [“But we need not here decide whether a trial court has discretion under [former Rule 3.1700] to grant an extension of time to file a cost bill when more than 50 days from notice of entry of judgment have passed.”].) However, the Court of Appeal in Lee did find that a prevailing party could file a motion and properly seek relief to file a memorandum of costs under Code of Civil Procedure section 473 six months after the order finding the memorandum of costs untimely. (Lee, supra, 88 Cal.App.4th at pp.1199-1200.)

Defendant contends that Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116, establishes that the Court can extend the deadline to file a memorandum on its own. Defendant’s reading of Cardinal is too broad. In relevant part, the Fourth District Court of Appeal in Cardinal held that pursuant to Rule 3.1700(b)(3), “a trial court may grant the extension on its own motion. [Citation.] The rule does not require that the party expressly request the extension, or that the court specifically state that it granted the extension.” (Cardinal Health 301, Inc., supra, 169 Cal.App.4th at p.155.) However, this holding merely denotes that the trial court has authority to provide the 30-day extension without any request for extension. It is not authority that the trial court can grant an extension beyond the 30-day extension such as would be necessary for the memorandum of costs here filed 131 days after judgment.

However, in contrast to Bankes and Nazemi, the Second District Court of Appeal in Gunlock Corp. v. Walk on Water, Inc. (1993) 15 Cal.App.4th 1301, found that the trial court has “substantial latitude in allowing fees to be awarded without strict compliance with statutory temporal and procedural limitations” where the violation was technical and there was no prejudice from the violation. (Gunlock, supra, 15 Cal.App.4th at pp.1304–1305.) In doing so, the Gunlock court relied on Hoover and the Supreme Court’s opinion in Pollard.

When presented with conflicting Court of Appeal authority, “the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions.” (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 456.) Here, the reasoning in Gunlock is more compelling because it comports with the Supreme Court’s reasoning in Pollard that unless prejudice can be shown from a late-filed cost memorandum, the court has discretion in such instance to award costs notwithstanding the failure to comply with the time limits of Rule 3.1700. (See Gunlock, supra, 15 Cal.App.4th at p.1304 [time limits pertaining to cost memoranda are not jurisdictional, and “ ‘trial court has broad discretion in allowing relief from a late filing where ... there is an absence of showing of prejudice to the opposing party’ ”].) As no prejudice is even claimed or identified, the Court finds that Defendant’s failure to strictly comply with the time limits of Rule 3.1700 does not warrant striking the entire memorandum of costs.

Based on the foregoing, Plaintiff Creditcard Data Services, Inc.’s motion to strike costs is DENIED.

[1] Defendant did not seek or obtain leave to file a surreply. Hence, the unauthorized surreply is stricken. The Court notes that consideration of the surreply on its merits would not affect the outcome of the Court’s ruling.

Superior Court of California

County of Los Angeles

Department 26