Judge Joel L. Lofton, Case Number: 19GDCV00125, Date: 2024-05-06 Tentative Ruling

Judge: Joel L. Lofton, Case: 19GDCV00125, Date: 2024-05-06 Tentative Ruling

Case Number: 19GDCV00125 Hearing Date: May 6, 2024 Dept: X

Tentative Ruling

Judge Joel L. Lofton, Department X

HEARING DATE: May 6, 2024 DISPOSED: January 29, 2024

CASE: TIANGANG SUN, a natural person; and XIANGMING SUN, a natural person, v. KYN GROUP, a California Corporation; KWN LLC, a California limited liability company; JACK ng, a natural person; AMERICAN CONTRACTORS INDEMNITY COMPANY, a California Corporation; and DOES 1 to 50.

CASE NO.: 19GDCV00125

MOTION TO TAX COSTS

MOVING PARTY: Defendants KYN Group; KWN, LLC; Jack Ng; and Kwok Ng (“Defendants”)

RESPONDING PARTY: Plaintiffs Tiangang Sun and Xiangming Sun (“Plaintiffs”)

SERVICE: Filed February 20, 2024

OPPOSITION: Filed April 19, 2024

REPLY: Filed April 26, 2024

RELIEF REQUESTED

Defendants move for an order striking Plaintiffs’ memorandum of costs.

BACKGROUND

Plaintiffs Tiangang Sun and Xiangming Sun (“Plaintiffs”) allege that defendants KYN Group, KWN LLC, Jack Ng, American Contractors Indemnity, Kwok Yuen Ng, and Does 2 to 50, (“Defendants”) promised to build a home for Plaintiffs. Plaintiffs allege that they paid Defendants over a million dollars for the construction project. Plaintiffs allege that Defendants diverted funds to other projects or failed to use the money towards Plaintiff’s home. Plaintiffs allege that Defendants have failed to complete the construction.

Plaintiffs filed a First Amended Complaint (“FAC”) on November 10, 2021, alleging ten causes of action for: (1) Breach of Contract, (2) Breach of Covenant of Good Faith and Fair Dealings, (3) Negligence, (4), Diversion of Construction Funds [Penal Code section 484b], (5) Breach of Fiduciary Duty, (6) Recovery on Contractor’s License Bond, (7) Violation of Business & Professions Code section 7086, (8) Unfair Business Practices [Bus.& Prof. Code section 17200]; (9) Unjust Enrichment, and (10) Declaratory Relief.

TENTATIVE RULING

Defendants’ motion to tax costs is DENIED.

LEGAL STANDARD

Code of Civil Procedure section 1032, subdivision (b), provides: “Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” “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 . . . .” (Cal. Rules of Court, Rule 3.1700, subd. (a)(1).) “Any notice of motion to strike or to tax costs must be served and filed 15 days after service of the cost memorandum.” (Cal. Rules of Court, Rule 3.1700, subd. (b)(1).)

“If items on a memorandum of costs appear to be proper charges on their face, those items are prima facie evidence that the costs, expenses, and services are proper and necessarily incurred. [citations.] The burden then shifts to the objecting party to show them to be unnecessary or unreasonable.” (Doe v. Los Angeles County Dept. of Children & Family Services (2019) 37 Cal.App.5th 675, 693.) “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.’ [citation.] (Foothill-De Anza Community College Dist. v. Emerich (2007 ) 158 Cal.App.4th 11, 29.)

“[T]he mere filing of a motion to tax costs may be a ‘proper objection’ to an item, the necessity of which appears doubtful, or which does not appear to be proper on its face. [citation.] However, ‘[i]f the items appear to be proper charges, the verified memorandum is prima facie evidence that the costs, expenses and services therein listed were necessarily incurred by the defendant [citations], and the burden of showing that an item is not properly chargeable or is unreasonable is upon the [objecting party].’ ” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131.)

REQUEST FOR JUDICIAL NOTICE

Plaintiffs’ request for judicial notice is GRANTED as to exhibits 1 through 5. However, for the future, Plaintiffs should file a separate filing when requesting judicial notice.

DISCUSSION

Defendants move for an order taxing, Plaintiffs’ memorandum of costs as to Item 8(b)(5) Expert Fees, $43,072.10, Court Reporter/Transcript Fees, Item 11, $9,158.01, and photocopy charges in the amount of $99.75.

Defendants assert that the expert witness fees are not recoverable as Plaintiffs did not provide a section 998 Offer to Compromise. They contend that even if expert fees were considered recoverable, Plaintiffs fail to substantiate their request for $43,072.10 in expert fees with adequate documentation, including a declaration of counsel and paid invoices pursuant to Levy v. Toyota Motor Sales (1992) 4 Cal.App.4th 806. Defendants point out specific overcharges, such as the claim involving John E. Altstadt, who billed nearly $30,000 for 73.35 hours of work. They argue his involvement was unnecessary, as his testimony regarding lost rental value was contradicted by Plaintiffs’ own admission of no incurred losses, and the Court ultimately did not award damages based on his testimony. Defendants also criticize the charges related to other expert witnesses, Gregg Freedman and David Stern, who only visited the property once and could not have justifiably billed for 18.3 hours each. Further, Defendants assert that their deposition costs were already covered by the Defendants such that further expert fees are unwarranted.

Defendants argue that Plaintiffs should only recover the statutory amount for court reporter fees as distinct from transcript costs, pointing out that the costs for the court reporter were equally shared between the parties. Defendants state that the per diem fee was $764.00 for the 5 days of trial, totaling $3,825.00 paid by Defendants.

Defendants argue that the requested charges of $99.95 should be disallowed since such expenses, including copying documents and related administrative charges, are typically not shifted to the non-prevailing party unless explicitly permitted by law.

In opposition, Plaintiffs assert that the restated contract and line of credit promissory note permitted the prevailing party to recover all costs, not just statutory costs. The Restated Contract states in paragraph 7 that the “prevailing Part(ies) in such action and/or proceeding shall be entitled to recover from the other(s) all reasonable attorney fees and costs incurred by such Part(ies) in the action and/or proceeding” [emphasis added] (See Exhibit 1). By agreeing to this term, Plaintiffs assert that both parties agreed that the prevailing party was entitled to recover all expenses they incurred in litigation. The Line of Credit Promissory Note state in paragraph 7 that the Defendants “[agree] to pay, in addition to the principal and interest payable hereunder, reasonable attorneys' fees and costs incurred by” the Plaintiffs to collect on the note [emphasis added] (See Exhibit 3). Additionally, Plaintiffs state that the Deed of Trust and the Loan Agreement state that Plaintiff can recover all expenses.

In reply, Defendants argue that no contract explicitly provides for the recovery of expert witness fees, and therefore, such costs should not be recoverable. Defendants emphasize that an award of costs does not inherently include expert witness fees without a specific contractual provision or other legal basis. Defendants argue that the contractual language in the agreements involved does not support the recovery of expert witness fees. They contend that Plaintiffs’ interpretation of the contracts is overly broad and unsupported by the contractual text or the parties’ intent. They highlight that the contracts do not explicitly state that expert witness fees are included in the costs and that there was no evidence of any intent by the parties to negotiate such terms. Defendants also argue that expert witness fees, even if potentially recoverable, should have been pleaded and proven at trial rather than claimed through a memorandum of costs. They suggest that Plaintiffs’ failure to do so deprives the court of the necessary evidence to assess the reasonableness and necessity of the fees. In support of Defendants’ arguments, Defendant Kwok Ng files a declaration in reply, claiming that he did not agree to pay witness fees in connection with this case. (Ng Decl. ¶ 7.)

As to the expert witness fees, Defendants rely on new evidence in their reply to support their claim that they had no intention of entering into an agreement that provided expert witness fees to be recoverable by the prevailing party. However, upon review of the agreements, the Court finds that Plaintiffs’ interpretation is reasonable. Thus, Plaintiffs are entitled to expert witness fees, reporters’ fees, and photocopy chargers. Further, Plaintiffs provide that the Court ordered transcripts in this case such that the costs for reporters’ were recoverable.

“Initial verification will suffice to establish the reasonable necessity of the costs claimed. There is no requirement that copies of bills, invoices, statements, or any other such documents be attached to the memorandum.” (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1267.) Further, the Court in Jones stated that “ ‘mere statements in the points and authorities accompanying its notice of motion to strike cost bill and the declaration of its counsel are insufficient to rebut the prima facie showing [that the costs were necessarily incurred].’ ” (Id. at p. 1266.)

Defendants fail to provide any evidence to demonstrate that the charges in the memorandum of costs were not reasonably incurred as to these costs. Plaintiffs have met their initial burden by submitting a memorandum of costs that appear to have been proper charges. Defendants, however, relies solely on the argument contained in their memorandum and have failed to submit any evidence to support their claim that the costs are unnecessary or unreasonable. Thus, Defendants motion to tax costs as to expert witness fees, reporters’ fees, and photocopy charges is denied.

CONCLUSION

Defendants’ motion to tax costs is DENIED.

Moving Party to give notice.

Dated: May 6, 2024 ___________________________________

Joel L. Lofton

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court indicating their

intention to submit. alhdeptx@lacourt.org