Judge: H. Jay Ford, III, Case: SC124545, Date: 2022-08-02 Tentative Ruling

Case Number: SC124545    Hearing Date: August 2, 2022    Dept: O

Case Name:   Preservation, Finance, Rehabilitation & Development LP v. Associated Financial Corporation, et al.

SUBJECT:                 MOTION TO TAX COSTS

MOVING PARTY:   Defendants/Cross-Complainants Associated Financial Corporation and Management Assistance Group, Inc. and Cross-Complainant BLD Company, LLC

RESP. PARTY:         Defendants/Cross-Defendants PL Acquisition Inc. and Lawrence F. Penn

TENTATIVE RULING

            Cross-Complainants Associated Financial Corporation and Management Assistance Group, Inc. and BLD Company’s Motion to Tax Costs is DENIED. 

            PL Acquisition, Inc. and Lawrence F. Penn (“PL Parties”) were named in the 1^st cause of action for declaratory relief, 3^rd cause of action for declaratory relief and 4^th cause of action for accounting of the Second Amended Cross-Complaint (SAXC) filed by Associated Financial Corporation, Management Assistance Group, Inc. and Cross-Complainant BLD Company, LLC.  Cross-Complainants’ 1^st and 3^rd causes of action for declaratory relief were dismissed as moot by the Court.  See Statement of Decision filed on 3-8-22, 2:10-17.  The Court found that Cross-Complainants “AFC and BLD failed to prove PLA holds any money is due to AFC or BLD, or that PLA or Penn has otherwise failed to account to AFC for any such sums.”  Id. at 2:13-17. 

            Based on the Court’s statement of decision and the judgment entered thereon, the PL Parties are prevailing parties under CCP §1032(a)(4).  As to the 1^st and 3^rd causes of action in the SAXC, the PL Parties were defendants in whose favor a dismissal was entered and against whom the plaintiffs did not recover any relief.  A cross-defendant is the prevailing party entitled to costs under CCP §1032 when the cross-complaint is dismissed as moot.  See City of Long Beach v. Stevedoring Services of America (2007) 157 Cal.App.4^th 672, 678 .  “A dismissal of an action against a defendant based on mootness grounds will always be a mere clerical act.  But that does not mean that the dismissal was not in defendant’s favor.”  Id.  Dismissal based on mootness still allows a Cross-defendant to “achieve its litigation objective of avoiding liability.”  Id.  “There is no exception in the cost statute for dismissals of cross-complaints obtained on the ground that the cross-complaint has become moot.  When a cross-complaint is dismissed as moot, the cross defendant is one in whose favor the cross-complaint and is therefore a prevailing party under Code of Civil Procedure section 1032 entitled to costs as a matter of right.”  Id. (Cross-defendant was prevailing party for recovery of costs under CCP §1032 even though Cross-complaint for equitable indemnification against it was dismissed for mootness)

            As to the 4^th cause of action for accounting, the Court entered judgment in the PL Parties favor based on the substantive merits of the cause of action.  PL Parties were defendants against whom Cross-Complainants did not recover any relief under CCP §1032(a)(4). The PL Parties are entitled to recover their prejudgment costs incurred in connection with litigating the SAXC as a matter of right.  “In ruling upon a motion to tax costs, the trial court's first determination is whether the statute expressly allows the particular item and whether it appears proper on its face.  If so, the burden is on the objecting party to show the costs to be unnecessary or unreasonable.  Where costs are not expressly allowed by the statute, the burden is on the party claiming the costs to show that the charges were reasonable and necessary.”  Rozanova v. Uribe (2021) 68 Cal.App.5th 392, 459. 

            The items listed on the memo of costs are all expressly allowed under CCP §1033.5(a)—filing fees, deposition costs, court-ordered transcripts and fees for electronic filing or service.  CCP §1033.5(a)(1), (3), (9) and (14).  Cross-Complainants fail to demonstrate that the costs were unnecessary or unreasonable to litigation of the 1^st, 3^rd and 4^th causes of action against the PL Parties in the SAXC.  Cross-Complainants fail to cite any authority that would allow the Court to reduce the requested costs merely because one of the causes of action was a “minor” part of the case.  PL Parties prevailed on every cause of action alleged against them in the SAXC. 

            Moreover, the depositions of Deane Ross, Sheldon Berger and Thomas Derryberry were reasonable and necessary to defend against the 1^st, 3^rd and 4^th causes of action.  These causes of action included allegations regarding the 50/50 deal between Preservation Finance and Associated Financial Corporation and Management Assistance Group, Inc

            The Court also finds no basis to limit PL Parties recovery of costs from Cross-Complainant BLD.  There is nothing in the caption of the 1^st, 3^rd or 4^th causes of action indicating that they are only being brought by BLD against the Cross-Defendants.  Moreover, the Court included all Cross-Complainants in its analysis of the SAXC, including the 4^th cause of action, against the PL Parties.  See Statement of Decision filed on 3-8-22, 2:10-17 (“AFC and BLD failed to prove PLA holds any money is due to AFC or BLD, or that PLA or Penn has otherwise failed to account to AFC for any such sums.”)

            Cross-Complainants fail to carry their burden as the party moving to tax the PL Parties’ memo of costs.  Cross-Complainants’ motion to tax costs is DENIED.