Judge: Jon R. Takasugi, Case: BC654909, Date: 2023-01-24 Tentative Ruling

Case Number: BC654909    Hearing Date: January 24, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Plaintiff’s motion to tax costs is GRANTED IN PART, DENIED IN PART. Plaintiff’s motion to tax is granted as to the two duplicative invoices, the pre-998 offer expert fees, the costs associated with Martha Vaughn’s deposition, and a portion of technology costs. Plaintiff’s motion is denied in all other respects. 

Accordingly, the Court taxes $107,245.95 in costs, thereby reducing Defendant’s cost award from $410.970.72 to $303,724.77. 

On March 21, 2017, Plaintiffs Kreitzman and Brian Senit (collectively, Plaintiffs) filed the instant action. On May 23, 2018, Plaintiffs filed a second amended complaint (SAC) against Mercury Casualty Company (Mercury), Sunny Hills Associates, Inc., Alliance Environmental Group, Patriot Environmental Services, and Delta Commerce Corporation, alleging: (1) breach of contract; and (2) breach of the covenant of good faith and fair dealing; and (3) negligent misrepresentation.

Now, Plaintiffs move to tax costs.

Discussion

            Plaintiff argues $410,070.72 in costs should be reduced by a total of $346,944.82, bringing the actual recoverable costs to $63,125.90. In particular, Plaintiff argues:

(1)  Pre-998 Offer costs are not recoverable under CCP section 998(c)(1). ($126,208.40);

(2)  Mercury double-submitted two invoices for experts Paul Hamilton and Jay Rosenthal ($8,837.75);

(3)  Expert witness costs are not reasonable as costs expended on experts not used at trial were not "actually incurred and reasonably necessary" in preparation for trial, or during trial, as required by CCP § 998(c)(1), and the costs for Mark Viau were excessive ($138,685.00);

(4)  Mercury's "litigation support professionals" costs are not reasonable or authorized by statute ($50,313.94);

(5)  Mercury inflated deposition costs for four expert witnesses it never intended to use and a former co-worker of Plaintiff Kreitzman are not necessary to the conduct of the litigation pursuant to C.C.P. §1033.5(a)(3) and 1033.5(c)(2) ($2,991.90);

(6)  Mercury failed to provide statutorily-required information as to the service of process ($5,775.84);

(7)  Mercury's invoices for court reporter fees erroneously include transcript costs, which is not authorized by statute ($7,099.75); and

(8)  Trial exhibit costs, including costs for assembly, trial binders and index tabs, are not reasonable and the cost is not necessary ($7,032.24).

The Court addresses each in turn.

As to the first category, Plaintiffs argue that recovery of costs is limited to those incurred after the time of the 7/9/2021 998 offer. In opposition, Defendant argues that it is entitled to recover all—pre and post-offer—costs as the prevailing party, with the exception of pre-offer defense expert fees incurred before the 7/9/2021 998 offer.

The Court agrees with Defendant that all pre-offer costs are also recoverable, with the exception of pre-offer defense expert fees. CCP section 998, subdivision (c)(1) (emphasis added) provides:

If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer. In addition, in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover postoffer costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the defendant.

As such, section 998 is meant to reverse the parties’ entitlement to costs as prevailing parties, depending on the outcome of the litigation—if judgment was entered for Plaintiffs at trial, but they failed to obtain a less favorable judgment than the section 998 offer, Plaintiffs would still be entitled to pre-offer costs, but would be required to pay Defendants’ post-offer costs despite being the prevailing parties. As such, section 998 is based on the premise that a prevailing party is entitled to recover all litigation costs, and seeks to induce compromise by shifting that entitlement in the event of denial. Under Plaintiffs’ interpretation of section 998, Defendant would have been entitled to all costs if it hadn’t made a section 998 offer, but by making an offer it limited its recovery to only post-offer costs. The Court is not persuaded by this interpretation which would disincentivize parties from making a 998 offer, less they limit their ability to recover litigation costs despite being the prevailing party. Importantly, Plaintiffs did not cite any case law to support their interpretation

As such, the Court concludes that Defendant is not limited to post-offer costs as a matter of law. While the Court finds (and Defendant concedes) that the defense expert fees incurred before the 7/9/2021 998 offer are not recoverable, the Court finds the supporting evidence submitted as part of its opposition to be sufficient to show the pre-offer costs were actually incurred and necessary for litigation.

As for the second category, Plaintiff argues that Defendant unreasonably seeks duplicative recovery for two invoices for experts Paul Hamilton and Jay Rosenthal ($8,837.75). In opposition, Defendant conceded this was in error. As such, the Court finds these costs properly taxed.

As for the third category, Plaintiff argues that Defendant’s expert witness costs were not reasonable because: “This was not a complex case involving many parties but a straightforward insurance bad faith case. Trial only lasted nine days. (Walsh Decl., ¶ 19.). Mercury designated six expert witnesses on its expert designation, yet only Mark Viau and Paul Hamilton testified. (Walsh Decl., ¶ 20 and Exh. 2.)” (Motion, 13: 7-10.) Moreover, Plaintiff argues that Mark Viau’s invoices for nearly $130,000 is excessive. (Id. at 11-12.)

In opposition, Defendant argues that just because all experts did not testify at the time of trial, does not mean that defense expert fees were not incurred or unnecessary. To the contrary, Defendant argues that “these defense experts were deposed and provided invaluable opinions that were used at the time of trial, whether they testified at trial or not.” (Opp., 11: 6-8.)

The Court agrees. As Defendant detailed in its opposition, Jay Rosenthal, defense weather expert, provided important review and analysis of weather data and performed complicated calculations after specific rainwater contribution on pertinent dates. Rick Harris, defense roofing expert, prepared opinions regarding the condition of the roof both at the time of the incident and before the incident, regarding the leaks and sources of the roof leaks. Jan Ramsay provided opinions which were used by defense counsel to argue that Plaintiffs failed to timely report their claim, which not only prejudiced the Defendant but also meant that Plaintiffs did not bring their suit within the one-year suit limitations deadline pursuant to the insurance policy. Brian Statouly, expert industrial hygienist, testified and provided opinions regarding Plaintiffs' allegation that their home needed to be torn down to the studs due to contamination by asbestos and or mold. Plaintiffs' contention that they did not involve mold claims at any point is not supported by the facts presented during Plaintiffs' depositions and at the time of trial. His opinions were also necessary for the defense to prepare in cross-examining Mr. Moffett. The Court agrees that these expert fees were reasonably consulted, and thus their fees reasonably incurred.

Similarly, the Court agrees that Mr. Viau’s expert fees were reasonable and necessary. As Defendant explained:

While there were multiple defense experts, Mr. Viau probably carried the heaviest burden in terms of the sheer number of hours needed to prepare for his expert opinions and testify at the time of trial. He had the burden of reviewing numerous documents and information generated by the countless contractors that were not only retained by the Plaintiffs, but also retained and fired by them. Plaintiffs ultimately retained Dale Winchell as an expert, who claimed that Plaintiffs were entitled to over 1.4 million (and more, based on his allegation at the time that the lumber fees and other constructions costs had gone up during the pandemic) in damages to repair their home. Mr. Winchell prepared an extensive itemized list of repair items, the vast majority of which were for unrelated repairs for preexisting damages as well as upgrades and betterments. Mr. Viau, in order to contest Mr. Winchell's contentions, needed to create his own reports, which were extensive. These numerous reports included summaries, extensive opinions, and links to multiple photographs that supported his opinions. He needed to review and analyze thousands of photographs taken by multiple individuals since the loss date of January 2015 (or rather, likely November 2014). Mr. Viau also attended two property inspections, during which he not only performed inspections but also took numerous photographs. He was one of the first experts retained, in early 2018, and had been working on this case for over 4 years.

Plaintiffs' contention that Mr. Viau billed multiple times for trial preparation due to multiple trial continuances, is also without merit. Mr. Viau, like the other percipient and expert witnesses and even the attorneys involved, need to refresh their recollection and review file materials when trials were continued, and review new materials as well.

            (Opp., 10: 20-23.)

            Taken together, the Court finds Defendants’ post-offer costs to be reasonable and necessary.

As for the fourth category, Plaintiff argues that Defendant’s "litigation support professionals" costs are not reasonable or authorized by statute ($50,313.94), citing Science Applications International Corp. v. Superior Court (1995) 39 Cal.App.4th 1095.  In opposition, Defendant argues that Science Applications is no longer applicable and cites Bender v. City of Los Angeles (2013) 217 Cal.App.4th 968, 990-991. There, the Court expressly wrote:

Almost 20 years have passed since Science Applications was decided, during which time the use of technology in the courtroom has become commonplace (including a technician to monitor the equipment and quickly resolve any glitches), and technology costs have dramatically declined. . . . The costs at issue total just over $24,000. . . . The trial court acted well within its discretion in allowing recovery of these costs.

(Id. at p. 991.)

Here, on multiple occasions, Defendant's trial technology personnel resolved multiple technological issues during trial for both sides, despite the fact that Plaintiffs also had a trial technology technician. However, the Court agrees that $50,313.94 is unreasonable on its face. Thus, while the Court finds these costs properly recovered, the Court reduces the recoverable technology costs to $30,000.

As for the fifth category, Plaintiff argues that Defendant inflated deposition costs for four expert witnesses it never intended to use and a former co-worker of Plaintiff Kreitzman are not necessary to the conduct of the litigation pursuant to C.C.P. §1033.5(a)(3) and 1033.5(c)(2) ($2,991.90). As set forth above, the Court finds that just because all defense experts did not testify, they substantively contributed to Defendant’s case and thus were reasonably necessary.

However, the Court agrees that Defendant has not shown deposition costs for Martha Vaughn to be reasonably incurred. Ms. Vaughn was Plaintiff’s former co-worker, and this case concerned how an insurance claim was handled. In opposition, Defendant did not persuasively clarify why Ms. Vaughn was likely to have information relevant to this action. Rather, Defendant argued: “Plaintiffs also claim that Mercury unnecessarily deposed a former co-worker of plaintiff Kreitzman. The co-worker of Ms. Kreitzman, Marth Vaughn, may have had relevant information that may have led to the discovery of admissible evidence. Even though she ultimately was not asked to testify at trial, Defendant had good reason to seek her deposition testimony. As a result, it was reasonable to take her deposition and the incurred cost should be recoverable.” (Opp., 13:26-14:3.) Such an explanation is overly vague and conclusory, and is insufficient to justify this cost. 

As for the sixth category, Plaintiff argues that Defendant failed to provide statutorily-required information as to the service of process ($5,775.84). As a preliminary matter, Defendant, as prevailing party, is entitled to all of its service costs, and not just post 998 offer service costs. Therefore, the entire $8,715.94 incurred for service costs, and not just the $5,775.84 incurred after the 998 offer was served, are recoverable by Defendant as the prevailing party. Moreover, the Court finds that the costs claimed are reasonable. Plaintiff contends that charges for expedited service, extended area charges and advance charges should not be recoverable. However, the Court is not persuaded that these charges were unnecessary. Moreover, Defendant’s opposition includes additional documentation not available at the time the Memorandum of Costs was filed which corroborate the costs claimed. Finally, charges by Specialized Investigations were incurred in an effort to serve witness Beverly Longstreet, who was one of the former therapists or counselors for Plaintiff Jackie Kreitzman. Since Ms. Longstreet had retired, it was difficult to serve her and defense needed to retain a private investigator. (Kim Decl. ¶16.) Not all non-party witnesses can be readily served with subpoenas and often a private investigator must be retained to assist in service attempts. Such efforts were reasonably incurred.

As for the seventh category, Plaintiff argues that Defendant’s invoices for court reporter fees erroneously include transcript costs, which is not authorized by statute ($7,099.75). CCP section 1033.5 provides for recovery of “"any other item ...required to be awarded... [by] statute as an incident to prevailing in the action at trial ....” The Realtime transcripts, which were provided to this Court and to counsel, were reasonably helpful during trial and thus are recoverable.

Finally, as for the eighth category,  Plaintiff argues that trial exhibit costs, including costs for assembly, trial binders and index tabs, are not reasonable and the cost is not necessary ($7,032.24). As noted, Defendant is entitled to recover costs as the prevailing party.

Based on the foregoing, Plaintiff’s motion to tax costs is granted in part, denied in part. Plaintiff’s motion to tax is granted as to the two duplicative invoices ($8,837.75), the pre-998 offer expert fees ($77,031.26), the costs associated with Martha Vaughn’s deposition ($1,063.00), and a portion of the technology costs ($20,313.94). Plaintiff’s motion is denied in all other respects. 

Accordingly, the Court taxes $107,245.95 in costs, thereby reducing Defendant’s cost award from $410.970.72 to $303,724.77.  

It is so ordered.

Dated:  January    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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