Judge: Joseph Lipner, Case: 21STCV25557, Date: 2023-12-14 Tentative Ruling

Case Number: 21STCV25557    Hearing Date: December 14, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff and Cross-Defendant State Farm Mutual Automobile Insurance (“State Farm”) moves to strike the Memorandum of Costs of Defendants and Cross-Defendants Irshaad Tarr and Rodeo Exotic Rentals, LLC (“Rodeo”) or, in the alternative, to tax their memorandum of costs.

The Court DENIES Defendant’s motion and finds Tarr and Rodeo’s modified costs of $2,031.26 to be reasonable.

Background

This is a declaratory relief action filed by State Farm to determine its liability under an automobile collision and liability insurance policy.

On July 13, 2020, Defendant Rodeo rented a car to Defendant Lovingood, who was involved in a car crash with Defendant Tywon Tyson White later that day. Defendants Rodeo and Tarr filed a lawsuit against Lovingood and White for breach of the rental contract and negligence (“Rodeo Lawsuit”).

On July 12, 2021, State Farm filed this declaratory action to determine whether it owed collision and liability coverage to its named insured, Lovingood, under Lovingood’s State Farm insurance policy (“DRA Lawsuit”). Plaintiff named, among others, Rodeo and Tarr as defendants.

Defendant Lovingood then filed a Cross-Complaint for bad faith against State Farm and a fraud claim against Rodeo.

State Farm agreed to settle both the Rodeo Lawsuit and the DRA Lawsuit.

In the Rodeo Lawsuit, State Farm paid Tarr and Rodeo a sum of money for the alleged property damages to the rented car. Lovingood, Tarr, and Rodeo executed a settlement agreement waiving costs and attorney’s fees in the Rodeo Lawsuit.

In this action, the DRA Lawsuit, State Farm reached a settlement with Lovingood under which it paid Lovingood a sum of money and, in exchange, Lovingood dismissed the Cross-Complaint against all parties, including Tarr and Rodeo. State Farm and Lovingood executed a settlement agreement waiving attorney’s fees and costs in the DRA Lawsuit. On September 25, 2023, State Farm dismissed this action, the DRA Lawsuit, with prejudice.

On October 4, 2023, Tarr and Rodeo filed a Memorandum of Costs for this case, the DRA Lawsuit, in which they are seeking recovery of costs totaling $2,046.26.

State Farm filed this motion to strike the Memorandum of Costs on October 23, 2023. Tarr and Rodeo filed an opposition and State Farm filed a reply. In their opposition, Tarr and Rodeo revise the requested costs down to $2,031.26.

Legal Standard

“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.” (Code Civ. Proc., § 1032, subd. (b).) (Emphasis added.)

A prevailing party is defined as “[1] the party with a net monetary recovery, [2] a defendant in whose favor dismissal is entered, [3] a defendant where neither plaintiff nor defendant obtains any relief, and [4] a defendant as against those plaintiffs who do not recover any relief against that defendant.” (Code Civ. Proc., § 1032, subd. (a).) “[T]he trial court has no discretion to deny prevailing party status to a litigant who falls within one of the four statutory categories in the first [sentence] of the provision. As rewritten [in 1986], section 1032 now declares that costs are available as a ‘matter of right’ when the prevailing party is within one of the four categories designated by statute.” (Charton v. Harkey (2016) 247 Cal.App.4th 730, 738 [internal quotations and citations omitted].) 

“A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of mailing of the¿notice of entry of judgment…The memorandum of costs must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case.”¿(Cal. Rules of Court, rule 3.1700.) 

The losing party may contest the costs that a prevailing party seeks. (CCP §1034(a).) The challenging party has the burden of demonstrating that those costs are unreasonable or unnecessary. (Adams v. Ford Motor Co.,¿(2011) 199 Cal. App. 4th 1475, 1486; 612¿South LLC v. Laconic Limited Partnership, (2010) 184 Cal. App. 4th 1270, 1285.)  

Code of Civil Procedure section 1033.5 sets forth the costs recoverable by the prevailing party. (Code Civ. Proc., § 1033.5.) “Allowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.”  (Code Civ. Proc., §1033.5(c)(2); Perko’s Enterprises, Inc. v. RRNS Enterprises (l992) 4 Cal.App.4th 238, 244.) A “properly verified memorandum of costs is considered prima facie evidence that the costs listed in the memorandum were necessarily incurred.” (Bach v. County of Butte (1989) 215 Cal.App.3d 294, 308; see also Hadley v. Krepel (1985) 167 Cal.App.3d 677, 682.) The memorandum of costs need not contain invoices, billings, or statements.  (Bach, at p. 308.)  (See also Cal. Rules of Court, Rule 3.1700(a)(1) [only verification required].)  

“Documentation must be submitted only when a party dissatisfied with the costs claimed in the memorandum challenges them by filing a motion to tax costs.”  (Bach v. County of Butte, supra, at p. 308.) This puts the burden 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.)  If items are properly objected to, they are put in issue and the burden of proof is on the party claiming them as costs. (Id.) “Defendant's 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.” (Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 266.) 

Discussion

Prevailing Party

As discussed above, a court has no authority to deny attorney’s fees and costs to a party that falls within one of the four statutory categories. (Charton v. Harkey, supra, 247 Cal.App.4th 738.) A defendant who is dismissed from a lawsuit is a prevailing party. (Civ. Code § 1032, subd. (a).)

Tarr and Rodeo are parties who were dismissed from this lawsuit.

State Farm argues that Tarr and Rodeo are not entitled to attorney’s fees and costs because there was no prevailing party in this action. State Farm contends that, because of the settlement agreements, Tarr and Rodeo cannot be said to be prevailing parties. State Farm contends that it understood the settlement terms in the DRA Lawsuit to include settlement for the Rodeo Lawsuit. It appears to imply that the terms of the Rodeo Lawsuit Settlement should also apply here.

That is not the law. The law, set forth above, is very clear that courts do not have discretion to deny attorney’s fees to a defendant who, as here, is dismissed from a lawsuit. Though Tarr and Rodeo waived fees in the Rodeo Lawsuit, that settlement does not appear to extend to the current action, the DRA Lawsuit.  Although State Farm in its Reply brief quotes language from the Rodeo Lawsuit settlement agreement to state that it did, State Farm raised the issue of the language for the first time in its reply, which does not properly preserve the issue.  State Farm also did not provide a copy of the agreement, stating only that it would do so “in camera” at the hearing.  Finally, the language quoted by State Farm in its reply brief does not appear to support State Farm’s argument. 

Neither Tarr nor Rodeo were partes to the settlement agreement in the current action, and thus cannot be bound by it under basic principles of contract law. If State Farm wished to include Tarr and Rodeo in the settlement for this lawsuit, and thus avoid costs, it should have sought to do so. As it stands, however, the statutory entitlement remains in place.

Reasonableness

State Farm disputes Tarr and Rodeo’s statutory court appearance fees of $439.20 (x2) and the One Legal $12.00 (x2) electronic filing charge for each of the parties’ respective appearances and answers. These costs are statutory and Tarr and Rodeo provide their receipts for the costs. (Thomas Decl., ¶ 13, Exh. B.) The Court finds these costs reasonable.

State Farm took Lovingood’s deposition. Tarr and Rodeo purchased a certified copy of the transcript, which cost $1,129.86. (Thomas Decl. ¶ 14.) State Farm requests an accounting of these costs, but it is unclear what further accounting would be needed.  It is a simple, one-time cost. The Court finds this cost to be reasonable.

State Farm objects to $38.00 in fees for LACourt Connect. Tarr and Rodeo provide sworn for a $23.00 for LACourt Connect, which was necessary because the Court was not taking in-person appearances at the time. (Thomas Decl. ¶ 15.) The Court finds the modified costs to be reasonable.

Good Faith Settlement

When a prevailing party has incurred costs jointly with one or more other parties who are not prevailing parties for purposes of an award of costs, the judge must apportion the costs between the parties. (Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1297.)

Here, Lovingood filed Cross-Claims against Tarr and Rodeo in addition to State Farm’s declaratory relief claim. State Farm states that it plans to file a motion for good faith settlement.  (Motion at pp. 9-10.)  State Farm of course may do so if it wishes to.