Judge Michael E. Whitaker, Case Number: 18SMCV00086, Date: 2024-11-22 Tentative Ruling

Judge: Michael E. Whitaker, Case: 18SMCV00086, Date: 2024-11-22 Tentative Ruling

These three related cases, which were consolidated for purposes of trial only, arise from a dispute between a homeowner and his homeowner’s association.

On January 26, 2017, Plaintiff and Cross-Defendant Hooman M. Melamed, M.D. (“Plaintiff” or “Melamed”) filed suit (“Case 1”) against Defendant and Cross-Complainant The Ridge Condominium, aka The Ridge Condominium Association (“Defendant” or “the Association”), captioned Melamed v. The Ridge Condominium Association, bearing case number SC126981.

Plaintiff’s operative second amended complaint asserts four causes of action against the Association for (1) declaratory and injunctive relief; (2) breach of contract; (3) breach of fiduciary duty; and (4) negligence, alleging the Association unreasonably targeted Plaintiff for parking his vehicle in a manner that it stuck out past the end of his driveway and failed to maintain, repair, and/or replace Plaintiff’s roof.

On July 7, 2017, Defendant filed a cross-complaint against Plaintiff, asserting two causes of action for (1) breach of governing documents; and (2) declaratory and injunctive relief, alleging Plaintiff violated the parking rules by parking in a manner that his vehicle protruded past the end of his driveway, parking in the common area, and utilizing guest parking spaces for his own use.

Following a jury trial, the Court entered judgment in favor of the Association as to all of Melamed’s claims, and in favor of Melamed as to the Association’s claim for breach of the governing documents. (See Judgment, June 27, 2024.) The parties had previously stipulated that the Association’s declaratory and injunctive relief claims were moot. (See id. at fn. 1.)

The Association has filed a memorandum of costs, seeking $212,379.54 and a motion for attorneys’ fees, seeking $3,004,626. Melamed has moved to tax the costs on the grounds that the requested costs are improperly inflated and the Association’s Code of Civil Procedure section 998 (“Section 998”) offer was void. Melamed also opposes the Association’s motion for attorneys’ fees, arguing that any attorneys’ fees award should not exceed $400,000. The Association has replied in support of its motion for attorneys’ fees and opposed Melamed’s motion to tax costs and Melamed has replied in support of his motion to tax costs.

On October 23, 2018, Plaintiff filed a second lawsuit (“Case 2”) against the Association, captioned Melamed v. The Ridge Condominium Association, bearing case number 18SMCV00086. Plaintiff’s operative second amended complaint asserts four causes of action for (1) violations of the Fair Housing Act; (2) violations of the California Fair Employment and Housing Act; (3) violations of the California Unruh Civil Rights Act; and (4) breach of fiduciary duty, alleging Defendant failed to provide reasonable parking accommodations when Plaintiff was temporarily disabled following a surgery.

Following a jury trial, the Court entered judgment in favor of the Association on all four of Plaintiff’s claims.

The Association has filed a memorandum of costs, seeking $77,187.71 and a motion for attorneys’ fees seeking $648,048. Melamed has moved to tax costs on the grounds that (1) the costs sought are improperly inflated; (2) the Association’s Section 998 offer was void; and (3) costs are not awardable on Plaintiff’s claims because Plaintiff’s case was not unreasonable, frivolous, meritless, or vexatious. Melamed has also opposed the Association’s motion for attorneys’ fees on the ground that the Association cannot recover any attorneys’ fees because this action was not “on the contract” or frivolous. The Association has replied in support of its motion for attorneys’ fees and opposed Melamed’s motion to tax costs and Melamed has replied in support of his motion to tax costs.

On March 12, 2021, Plaintiff filed a third lawsuit (“Case 3”) against the Association and additional Defendants Carol Tolchin; CT Prop Management, LLC; David R. Townley Company dba Olympic Roofing Company, Inc.; The Blackpointe Group; Blackpointe Group Construction & Management Inc. (“Defendants”), captioned Melamed v. Tolchin, bearing case number 21SMCV00487. The operative first amended complaint asserts four causes of action for (1) negligence; (2) aiding and abetting a breach of fiduciary duty; (3) nuisance; and (4) defective construction, alleging Defendants improperly targeted Plaintiff for parking violations and failed to maintain or repair Plaintiff’s roof. On December 16, 2021, the Court sustained Defendants’ demurrer to the second cause of action for aiding and abetting a breach of fiduciary duty.

On August 13, 2021, the Association cross-complained against Melamed for (1) breach of governing documents – motor vehicle parking violations; (2) breach of governing documents – unauthorized modifications to subject unit; and (3) declaratory and injunctive relief.

Following a jury trial, as to Plaintiff’s complaint, the Court entered judgment in favor of Defendants on all causes of action. As to the Association’s cross-complaint, the Court entered judgment in favor of Melamed as to the first cause of action and in favor of the Association as to the second cause of action, awarding the Association $1. (See Judgment, Jun. 27, 2024.)

The Association has filed a memorandum of costs, seeking $213,923.10 and a motion for attorneys’ fees seeking $2,124,896.60. Melamed has filed a motion to tax costs arguing (1) the costs are improperly inflated; and (2) the Associations section 998 offer was void. Melamed has also opposed Plaintiff’s motion for attorneys’ fees, arguing that any fee award should not exceed $594,920.50. The Association has filed a reply in support of its motion for attorneys’ fees and opposed Melamed’s motion to tax costs, and Melamed has filed a reply in support of his motion to tax costs.

In connection with Case 3, the Association has filed evidentiary objections to the Declaration of Andre E. Jardini, filed in support of Plaintiff’s Opposition to the Association’s Motion for Attorney Fees. The Court rules as follows with respect to the Association’s evidentiary objections:

Defendants object to Plaintiff’s Oppositions to the Motion for Attorneys’ fees as being untimely filed. The Court’s September 4, 2024 Order approving the parties’ stipulation for a continuance provided that Opposition papers were to be filed and served on or before October 28, 2024 and reply papers were to be filed and served on or before November 12. Yet, Plaintiff filed the Oppositions on November 8.

The Court has discretion whether to consider late-filed papers. (Cal. Rules of Court, rule 3.1300(d).) Although Defendants assert that they were prejudiced by the untimely opposition filings, they do not indicate how they were prejudice. Further, the Court notes that the Reply briefs were still timely filed on November 12.

Therefore, the Court exercises its discretion and considers Plaintiff’s late-filed oppositions.

Code of Civil Procedure section 1033.5, which outlines recoverable costs to a prevailing party under Code of Civil Procedure section 1032, permits the recovery of attorneys’ fees when authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5, subd. (a)(10).) Code of Civil Procedure section 1021 provides “[e]xcept as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties [….]”

Similarly, Civil Code section 5975, subdivision (c) provides, “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.”

Civil Code section 1717 also generally provides for the recovery of attorneys’ fees and costs, where the contract so provides.

However, where the contract at issue is a homeowner’s association’s governing documents, such as the Covenants, Conditions, and Restrictions (“CC&Rs”) at issue here, “the limitations applicable to contractual fee-shifting clauses, codified at section 1717, do not apply.” (Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal.App.5th 252, 260.) Rather, “the analysis of who is a prevailing party under the fee-shifting provisions of the Act focuses on who prevailed ‘on a practical level’ by achieving its main litigation objectives[.]” (Ibid.)

Here, the Association seeks its reasonable attorneys’ fees incurred, pursuant to the terms of the CC&Rs and pursuant to Civil Code section 5975.

20.9 Attorneys' Fees. In the event proceedings are brought by any party to enforce the Governing Documents, to restrain violations, or to determine the rights or duties of any person under this Declaration, the prevailing party shall be entitled to reasonable attorneys' fees and costs in addition to any other relief awarded.

The Association seeks attorneys’ fees in the amount of $3,004,626, representing $2,028,437 incurred by Kulik Gottesman Siegel & Ware LLP (“KGSW”) and $976,189 incurred by Lewis Brisbois Bisgaard & Smith (“LBBS”).

The Association originally retained KGSW under the Association’s Directors and Officers insurance policy. (Bernardoni Decl. ¶ 3.) In August 2019, the Association additionally retained LBBS under the Association’s general liability policy. (McCormick Decl. ¶ 3.) The Association contends there was a clear division of defense work between roofing/water issues defended by LBBS and the parking issues defended by KGSW, and that KGSW additionally prosecuted the Association’s cross-complaint for collection of parking fines. (Motion at p. 8.)

The parties do not dispute that all the claims at issue in Case 1 are based upon the CC&Rs and the parties’ duties thereunder.

The Association contends it is the “prevailing party” for purposes of Case 1 because it obtained dismissal of all of Melamed’s claims. Melamed argues that there is no prevailing party, as neither party obtained the monetary judgment it sought in connection with its complaint in Case 1, and therefore Case 1 is a “wash.” The Association counters in reply that the Association is the prevailing party because it defeated all of Plaintiff’s claims, and the fact that it did not additionally recover the $3,075 it sought in unpaid parking tickets on its cross-complaint is trivial in comparison.

The Court agrees with the Association that it is the “prevailing party” in the first action because it prevailed “on a practical level” by achieving its main litigation objectives, which were primarily to defeat Plaintiff’s claims.

Specifically, the amount in controversy by virtue of Plaintiff’s complaint far exceeds the amount in controversy at issue in the Association’s cross-complaint. Although Plaintiff’s complaint does not specify the amount of damages sought, Plaintiff filed an unlimited civil action, which means the amount in controversy in Plaintiff’s complaint necessarily exceeds the then-jurisdictional minimum of $25,000[1] (see Code Civ. Proc., §§ 85, 88).

Moreover, Plaintiff’s complaint asserts four causes of action which relate to repeated water intrusion into his unit from the damaged roof that he alleged the Association failed to repair and maintain, in addition to the Association’s alleged breaches of contract and fiduciary duty by improperly assessing parking citations. By contrast, the Association cross-complained to recover a comparatively paltry $3,075 in unpaid parking tickets. Thus, the main objective of the litigation pertained to Plaintiff’s claims, for which the Association obtained complete dismissals.

Melamed first argues that the Association failed to establish that the hourly rates sought for its attorneys are reasonable, because they exceed what was actually billed to the Association’s insurance carriers, and the Association did not demonstrate that the requested rates are reasonable.

As for the amounts actually billed, KGSW actually billed $960,122.00 in attorneys’ fees, representing hourly rates of $240 for partners and $190 for associates, which is lower than the $495 per hour for partners and $400 per hour for associations KGSW customarily charges. (Bernardoni Decl. ¶¶ 12-13.) Yet KGSW seeks to recover from Plaintiff a total of $2,028,437 in attorneys’ fees for the attorney time spent at the higher rates of $400 and $495 per hour for associates and partners, respectively. (Bernardoni Decl. ¶ 14.)

Similarly, for LBBS, the hourly rates actually billed range from $180 per hour for associates and $205 per hour for partners in 2019 to $205 per hour for associates and $230 per hour for partners in 2024. (Taylor Decl. ¶ 5.) Yet, LBBS seeks to recover its reasonable attorneys’ fees from Plaintiff at the rate of $400 per hour for associates and $495 per hour for partners. (Taylor Decl. ¶¶ 7-9.)

The prevailing party is entitled to recover a reasonable rate based on the prevailing market value of the services provided, and is not limited to the discounted rate actually charged to the client. (Chacon v. Litke (2010) 181 Cal.App.4th 1234, 1260.)

Further, the Association has substantiated its argument that the requested rates of $400 for associates and $495 for partners is reasonable. Specifically, the Association provided evidence that the Laffey Matrix shows a reasonable hourly rate for someone with Counsel Taylor’s experience between $661 in 2019 to $878 in 2024, someone with Counsel McCormick’s experience ranges from $899 to $1,057, and Plaintiff’s own attorneys have filed declarations seeking hourly rates of $450 and indicating their customary hourly rates are $495 (Taylor Decl. ¶ 7; McCormick Decl. ¶ 6; Bernardoni Decl. ¶ 13; Exs. B-C to McCormick Decl.)

Thus, the Association has provided evidence that the hourly rates sought are reasonable, and in line with Plaintiff’s counsel’s own requests. Plaintiff has not provided any evidence or legal authority to the contrary.

Melamed contends that fee expert Andre Jardini assessed the billing records in connection with Case 3, and found six general categories for reductions, warranting a reduction of the fees sought by KGSW by a ratio of 37.5 percent and reducing the fees sought by LBBS by a ratio of 43.2 percent. As such, Melamed seeks a similar percentage reduction of the fees sought in connection with Case 1.

As discussed more thoroughly below, the Court has gone through the specific deductions recommended by Jardini, and ultimately denied most of them. Although the Court’s review did result in some specific reductions, the Court cannot undergo a similar analysis with respect to Case #1, because Plaintiff did not provide any such similar expert analysis of the fees requested for Case #1.

Further, in light of the minimal reductions the Court identified in connection with Case #3, the Court declines to apply a blanket reduction modifier to the fees requested in connection with Case #1.

With respect to Case 2, Plaintiff additionally argues that although a prevailing plaintiff to a FEHA action may ordinarily receive his or her costs and attorneys’ fees, a prevailing defendant can only be awarded its costs and fees if “the court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so.” (Huerta v. Kava Holdings, Inc. (2018) 29 Cal.App.5th 74, 80-81; see also Gov. Code, § 12965, subd. (c)(6).) Similarly, Section 998 has “no application to costs and attorney and expert witness fees in a FEHA action unless the lawsuit is found to be frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” (Id. at p. 76.)

The same principle applies to the recovery of fees and costs by a prevailing defendant in an Unruh Civil Rights case. (Turner v. Association of American Medical Colleges (2011) 193 Cal.App.4th 1047, 1071.)

Further, the U.S. Supreme Court has applied the same principle regarding a prevailing defendant’s recovery of fees in the context of Title VII cases. (Christiansburg Garmet Co. v. Equal Employment Opportunity Commission (1978) 434 U.S. 412, 422.) And both federal and state courts have held that the same principles applicable to Title VII employment discrimination cases apply with equal force to housing discrimination cases. (Brown v. Smith (1997) 55 Cal.App.4th 767, 782; Beliveau v. Caras (C.D. Cal. 1995) 873 F.Supp. 1393, 1397.)

The Association argues that this was not really a discrimination action, because the allegations all stemmed from the Association’s duties under the CC&Rs. The Court disagrees. Many plaintiffs who assert discrimination claims have contractual relationships with defendants – whether a lease agreement, or CC&Rs. But the existence of a contractual relationship between the parties does not convert a discrimination claim to a breach of contract claim. The gravamen of Plaintiff’s claims in Case 2 are asserted as discrimination under FEHA, FHA, and Unruh, not as a breach of contract/governing documents.

The Association also argues that Case 2 was frivolous, unreasonable, or groundless in any event, but has provided no evidence demonstrating that Case 2 was frivolous, unreasonable, or groundless, other than bare assertions that the case was based upon a single email indicating Plaintiff was handicapped after a recent surgery that did not contain an actual accommodation request. Although the jury ultimately found in the Association’s favor at trial, that does not necessarily mean that the case was frivolous, unreasonable, or groundless.

The Association also argues that it also prevailed on Plaintiff’s fourth cause of action for breach of fiduciary duty, which is premised on the CC&Rs, and therefore it should be entitled to recover its fees incurred in successfully defending against the fourth cause of action. Again, the Court disagrees.

While it may be technically true that the Association’s fiduciary duty arose by virtue of the CC&Rs, the gravamen of Plaintiff’s breach of fiduciary duty claim in case 2 stems from the Association’s allegedly discriminatory practices. (See SAC ¶ 65 [“The Association breached its duty of care to Dr. Melamed by failing to exercise reasonable care in accommodating his disability”].)

This can be contrasted with Plaintiff’s breach of fiduciary duty claim in case 1, which fundamentally arises from alleged breaches of the CC&R’s. (See Case 1, SAC ¶ 51 [“THE RIDGE HOA breached its fiduciary duty to MELAMED by […] issuing unwarranted driveway parking citations in a grossly selective fashion and retaliating against him for asserting his rights herein.”; ¶ 52 [“THE RIDGE HOA breached its fiduciary duty by […] selective enforcement of the ASSOCIATION DOCUMENTS”].)

The Court does not believe it is consistent with the statutory scheme or legislative intent to shoehorn in attorneys’ fees and costs to a prevailing defendant simply because a plaintiff includes what is fundamentally a discrimination claim styled as a breach of fiduciary duty, especially where, as here, Plaintiff has brought another, contractual-based cause of action for breach of fiduciary duty in case 1, from which Plaintiff may recover many of the same attorneys’ fees or costs incurred for the consolidated trial.

Therefore, the Court declines to award reasonable attorneys’ fees or costs incurred by the Association, as a prevailing defendant, in connection with Case 2.

In connection with Case 3, Plaintiff seeks $2,124,896.60 in attorneys’ fees, representing $1,276,687.50 incurred by KGSW and $848,209.10 incurred by LBBS.

Plaintiff has retained fee expert Andre Jardini, who conducted an analysis of the actual billed charges of $987,517 ($604,085 for KGSW and $383,432 for LBBS.) Jardini identified six categories of fee reduction adjustments that Jardini contends should be made: (1) multiple personnel; (2) excessive; (3) non compensable; (4) tender; (5) overhead; and (6) error.

Jardini contends that a total of $134,312.69 should be reduced from the requested fees ($66,033 from KGSW and $68,279.69 from LBBS) on the grounds that there were multiple personnel billing on the case.

Specifically, Jardini recommends reducing fees requested whenever more than one attorney from each firm attended conferences, hearings, depositions, and trial. Upon review of Jardini’s schedule, every single entry Jardini tagged “MP” contained only two attorneys, except for trial, where three attorneys attended. The Court does not find two attorneys attending conferences, hearings, or depositions, or three attorneys attending trial to be unreasonable or excessive in an action involving five operative complaints/cross-complaints and two distinct legal issues (water intrusion/roof and parking violations/ADA accommodations) handled by two separate law firms.

Therefore, the Court denies Plaintiff’s request to make the requested “Multiple Personnel” reductions.

Jardini contends that a total of $184,255.57 should be reduced from the requested fees as excessive, representing a $105,614.69 reduction from KGSW and $78,640.88 reduction from LBBS.

Specifically, Jardini asserts that KGSW billed 496.20 hours and LBBS billed 369.90 preparing for trial, whereas, in Jardini’s opinion, “40 total hours would have been adequate to prepare for trial” for “a simple uncomplicated construction defect case” like this. (Jardini Decl. ¶ 87.)

The Court disagrees with Jardini’s characterization of this case as “a simple uncomplicated construction defect case” and that a total of 40 hours would have been sufficient to prepare for trial. Although the water intrusion claims pertained, in part, to allegedly negligent repair work, they also encompassed fiduciary responsibilities and unlawful discrimination, parking violations, and disability accommodations. This action involved three related cases, consolidated for purposes of trial, encompassing five operative complaints/cross-complaints, divided by subject matter across two law firms. Therefore, the Court denies Plaintiff’s request to cut trial preparation down to only 40 hours.

Jardini also faults Defendants for hiring counsel based in Orange County, as opposed to Los Angeles, and proposes cuts to travel times on this basis. The Court does not find these cuts warranted, especially in light of the Court’s orders for counsel to attend certain hearings in person.

Jardini also proposes cuts to the time spent on the demurrer, motion to strike, cross-complaint, and the motion for attorneys’ fees itself. Some of these proposed cuts are reasonable.

· 6.2 of 28.2 hours for “Review and analyze first amended complaint filed in the Tolchin action and analyze regarding demurrer and motion to strike and prepare”

· 3.9 of 11.9 hours for “Draft mandatory cross complaint against Melamed and prepare exhibits”

· 9.8 of 18.8 hours for “Review opposition to defendant’s demurrer and motion to strike and prepare reply”

· 2.6 of 19.6 hours for “Review case law regarding attorney fees for 3 separate judgments and prepare motion for attorney fees”

Thus, the Court reduces a total of 22.5 hours as excessive. Because it is not immediately clear whether these hours were charged at the associate rate of $400 or the partner rate of $495, the Court applies the lower rate, and reduces the attorney fees sought by $9,000 for excessive billing.

Jardini contends that $65,562.74 should be reduced from the requested fees as non-compensable charges, representing a $48,688.22 reduction from KGSW and $16,874.52 reduction from LBBS. Specifically, Plaintiff argues that because the Association did not prevail on its parking violations claim, fees spent on tasks relating to parking citations and violation of fair housing should not be included.

The Court disagrees that tasks pertaining to parking violations or the discrimination claims should be categorically excluded from the requested fees, because those issues were also incorporated in Plaintiff’s complaint, which the Association successfully defended against.

Jardini further asserts that entries referencing “case #1 and case #2” should be deducted from the requested fees. Upon review of the “NC” entries referencing Case #1 and Case #2, the Court does not find reductions warranted.

For example, the 3/16/21-3/17/21 entries for “Review new complaint by plaintiff against property management and association related to the defense of case #1 and #2 and review management agreement” clearly pertains to case #3 which was the “new complaint” filed on March 12, 2021, and was “related to the defense of case #1 and #2.” Similarly, the Court does not find it inappropriate to bill two hours to attend a hearing in case 1 on a motion to quash deposition subpoena of non-party Thomas M. Priselac and draft a memorandum regarding the same, as awareness of the developments in the related cases will also impact case # 3.

Jardini further contests entries relating to apprising the board and insurance carries about the status of the case. The Court disagrees. The Association is the client, and as such, counsel is required to provide regular updates to the board. Further, the insurance carriers paid for the Association’s defense. As such, regular updates to the insurance carriers were also appropriate.

Therefore, the Court denies Plaintiff’s request to reduce attorneys’ fees by the amounts it labeled “Non Compensable.”

Jardini contends that $3,546 should be reduced from KGSW’s requested fees as Tender, $3,112.50 should be reduced as Overhead ($1,462 from KGSW and $1,650.50 from LBBS), and $1,807 should be reduced as Error ($1,416 from KGSW and $391 from LBBS.)

With regard to Tender/Coverage, Plaintiff argues that because the tender/coverage negotiations began prior to the filing of Case #3, none of these entries should be compensable in Case #3. The Court disagrees. The issue of whether the insurance carriers would tender coverage in Case #3 was undoubtedly a separate decision from whether they would tender coverage in Case #1 and/or Case #2. Upon review of the specific entries, none of the entries occurred prior to the filing of Case #3. As such, the Court denies Plaintiff’s request to deny the Tender/Coverage fees.

Regarding Overhead, the Court agrees that most of the entries involve ministerial tasks, such as reviewing invoices/billing/budgets. However, the Court disagrees that 1.9 hours spent on “Review and analysis of hundreds of email communications between 2016 and 2018 related to parking violations, water intrusion issues from 2016, board meetings, hearings, citations to other homeowners (500+ pages) for ongoing litigation strategy to continue trial, possible basis to bifurcate trial and issues in preparation for strategy call with counsel” constitutes improper overhead.

Therefore the Court reduces the attorneys’ fees requested by 5.4 hours. Because the requested deductions involve multiple billers, and it is not immediately apparent which ones are partners and which ones are associates, the Court applies the lower rate of $400, for a total reduction of $2,160 for improper overhead.

Regarding Error, Plaintiff concedes in reply that the entries tagged as “error billing” pertain to other matters and should not be included in the attorney fee recovery. As such, the Court reduces the attorneys’ fees requested by 5.9 hours. All of these entries pertain to partner/Counsel Bernardoni (“DB”), so the Court applies the partner rate of $495, and reduces the requested attorneys’ fees by $2,920.50 for error billing.

“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).) “Prevailing party” includes, among other things, “a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant.” (Code Civ. Proc., § 1032, subd. (a)(4).)

Code of Civil Procedure section 1033.5, subdivision (a) sets forth items that are allowable as costs. Allowable costs under Section 1033.5 must be “reasonably necessary to the conduct of this litigation rather than merely convenient or beneficial to its preparation” and “reasonable in amount.” (Code Civ. Proc., § 1033.5, subd. (c)(2)-(3).) “Items not mentioned in [Section 1033.5] and items assessed upon application may be allowed or denied in the court’s discretion.” (Id. at subd. (c)(4).)

On a motion to tax, “[i]f 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. 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. Whether a cost item was reasonably necessary to the litigation presents a question of fact for the trial court and its decision is reviewed for abuse of discretion. However, because the right to costs is governed strictly by statute a court has no discretion to award costs not statutorily authorized.” (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774, internal citations omitted.)

“The court’s first determination, therefore, is whether the statute expressly allows the item, and whether it appears proper on its face. If so, the burden is on the objecting party to show them to be unnecessary or unreasonable.” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131, internal citations omitted.) The objecting party does not meet this burden by arguing that the costs were not necessary or reasonable, but must present evidence and prove that the costs are not recoverable. (Litt v. Eisenhower Med. Ctr. (2015) 237 Cal.App.4th 1217, 1224; Seever v. Copley Press, Inc. (2006) 141 Cal.App.4th 1550, 1557.)

In connection with Case 1, the Association seeks $212,379.54 in costs as follows:

In connection with Case 2, the Association seeks $77,187.71 in costs as follows:

As discussed above, with respect to Case 2, no costs are recoverable to the Association as the prevailing defendant in a FEHA action, because Case 2 was not frivolous, unreasonable, or groundless. Therefore, the Court taxes the entire $77,187.71 sought for Case 2.

As for Cases 1 and 3, Plaintiff moves to tax the witness fees on the grounds that the Section 998 settlement offer Defendants made was void. Plaintiff also moves to tax certain costs as being double or triple charged to Cases 1, 2, and/or 3, and some of the requested expert witness fees on the grounds that they were incurred prior to the Section 998 offer.

Expert witness fees are generally not allowable as costs under Section 1032, unless ordered by the Court. (Code Civ. Proc., § 1033.5.)

However, Section 998 augments Section 1032 to allow for the recovery of some expert witness fees in situations where a settlement offer was presented and rejected. (Code Civ. Proc., § 998, subd. (a) [“The costs allowed under Sections 1031 and 1032 shall be withheld or augmented as provided in this section”].) Specifically:

(c) (1) 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.

(d) If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the defendant 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 plaintiff, in addition to plaintiff’s costs.

A Section 998 offer to compromise “must be sufficiently specific to permit the recipient meaningfully to evaluate it and make a reasoned decision whether to accept it or reject it and bear the risk he may have to shoulder his opponent’s litigation costs and expenses.” (Berg v. Darden (2004) 120 Cal.App.4th 721, 727.) Further, it “must be written with sufficient specificity because the trial court lacks authority to adjudicate the terms of a purported settlement. […] Once the offer is accepted, the clerk or court performs the purely ministerial task of entering judgment according to the terms of the parties’ agreement.” (Ibid.)

In this regard, “The written offer shall include a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted.” (Code Civ. Proc., § 998, subd. (b).)

Melamed contends that the Section 998 offer here was insufficiently specific because it did not specify which of the three cases it was intended to apply to. Specifically, a Section 998 offer “must not dispose of any claims beyond the claims at issue in the pending lawsuit […] because of the difficulty in calculating whether a jury award is more or less favorable than a settlement offer when the jury’s award encompasses claims that are not one and the same with those the offer covers.” (Chen v. Interinsurance Exchange of the Automobile Club (2008) 164 Cal.App.4th 117, 121 (hereafter Chen).)

In Chen, the plaintiff had filed suit to recover damages related to water damage to their home in May 2003. While the first lawsuit was pending, the property suffered new water damage in August 2005, and the plaintiff filed a second, separate lawsuit pertaining to the new water damage. (Chen, 164 Cal.App.4th at pp. 119-120.) The defendants made a section 998 offer to compromise the first action for $251,000 in exchange for plaintiff dismissing the action with prejudice and “a general release of all claims.” (Id.at p. 120.) At trial, the plaintiff recovered only $8,500 in economic damages and $141,500 in non-economic damages. (Ibid.)

Because the actual recovery at trial was less than the $251,000 offered, the defendant moved to recover the costs of its expert witnesses. However, the court found the settlement offer invalid, because the “general release of all claims” encompassed the claims in the second lawsuit, and the court could not meaningfully determine what portion of the $251,000 section 998 offer pertained to the first action, versus what portion pertained to the separate, second action. (Chen, 164 Cal.App.4th at p. 120.)

By contrast, here, the three cases were related, pending in the same department, and consolidated for purposes of trial. Moreover, the offer simply provides that in exchange for Defendants’ payment of $300,000 to Melamed, all parties would dismiss their respective complaints and cross-complaints in all three of the actions with prejudice. (Ex. B to Lamothe Decl.) There is no additional provision releasing other claims not encompassed within the three, consolidated cases at issue before the Court.

Thus, the calculation is simple – Plaintiff’s combined recovery at trial for all three consolidated cases either exceeds the $300,000 offered, in which case Defendants may recover their post-offer expert witness fees incurred for the consolidated trial, or it does not, in which case they may not. Here, Plaintiff’s recovery in connection with all three cases was $0, and the Association’s recovery in connection with all three cases was $1 (awarded in connection with the Association’s cross-complaint in Case 3.)

Further, had Plaintiff accepted the offer, which the Court’s ministerial act of filing the offer to compromise in the three related cases and dismissing all three actions would be the same. Thus, there is no need to adjudicate the terms of the settlement.

Nor does the Court find persuasive Plaintiff’s argument that Plaintiff is effectively three separate plaintiffs by virtue of having filed three separate lawsuits. The case law Plaintiff cites in this regard establishes that an offer that requires allocation among or acceptance by other plaintiffs is not valid. Those principles do not apply where, as here, there is only one plaintiff.

Therefore, the Court does not find that the Section 998 offer is void or otherwise invalid for purposes of the cost-shifting provision.

Here, the Section 998 offer is dated September 26, 2022. (Ex. B to Lamothe Decl.) Therefore, Plaintiff seeks to tax the following expert witness fees, as being incurred before the Section 998 offer was made, either in whole or in part (with no way to determine what portion of the fees were incurred after the offer was made):

· Stephen Decker, Plaintiff’s appraiser - $1,480 incurred on 9/19/22, 9/23/22, and 9/29/22

· Thom Saunders, Plaintiff’s roofing expert - $675 incurred on 9/20/22 and 9/29/22

· Gidon Vardi, Plaintiff’s standard of care expert re Blackpointe - $425 incurred on 9/21/22

· Brent Mulgrew – Plaintiff’s mold remediation expert - $682.50 incurred on 9/23/22 and 10/3/22

The Court agrees that these fees totaling $3,262.50 were incurred prior to the Section 998 offer, either in whole or in part, and Defendants concede in opposition that these fees may be taxed from the expert fees requested. Accordingly, the Court taxes the $3,262.50 requested from Case 1 and from Case 3.

Plaintiff seeks to tax certain costs from the following categories, as being either incorrectly charged to the case under which they appear, or being duplicative, either in whole or in part, of the costs sought in other cases:

o $555.34 were applicable only to Cases 1 and 2, but were charged to all 3 cases

Further, Plaintiff argues that in Cases 1 and 3, extra binders were prepared for LBBS, which cost $4,471, and Plaintiff should not have to pay this extra expense because the Association retained two sets of counsel.

In Opposition, Defendants concede that they are not seeking double or triple recovery of their filing and motion fees, jury fees, or court reporter fees. Rather, Defendants assert that they are entitled to these costs, and they can be properly sought under any of the three cases. Therefore, in light of the fact that Defendants cannot recover their costs incurred in connection with Case 2, for costs that were either double requested in Cases 1 and 3 or were triple requested among all three cases, the Court will tax half of these requested costs, effectively pro-rating them evenly between Cases 1 and 3. For costs that were double requested in Case 2, and either Case 1 or Case 3, because the Court taxes the costs requested in connection with Case 2, the Court will not further tax the requested costs from Case 1 or 3.

Defendants do, however, refute taxing of deposition costs. Specifically, Defendants argue that the deposition costs being sought have only been requested once for each deposition transcript, and have been allocated only to Case 1, 2, or 3, as appropriate. Therefore, Defendants have met their burden of proof to claim the full amount of these costs sought in connection with Cases 1 and 3, and Plaintiff does not specifically address Defendants’ argument on reply. Therefore, the Court will not tax the deposition costs sought in Cases 1 or 3.

Defendants also rebuff Plaintiff’s contention that the “duplicate” binders prepared for LBBS should be taxed. The Court agrees with Defendants that LBBS was entitled to its own set of binders as Defense Counsel handling the discrete defense of the roofing/water issues. As such, the Court will not tax these costs sought in Cases 1 or 3.

Defendants do not address Plaintiff’s arguments that Defendants seek duplicate Expert Witness fees or duplicate Trial Exhibits & Model fees, and therefore Defendants have not met their burden of proof to claim these costs. As such, the Court will tax half of these requested costs, effectively pro-rating them between Cases 1 and 3.

o $701.04 divided by 2 = $350.52. $350.52 + 918.52 erroneously charged to Case 1 = $1,269.04 to be taxed from Case 1

o $95 is already appropriately taxed from Case 2 and appropriately charged to Case 1 in full

o $555.34 is appropriately taxed from Cases 2 and 3 and appropriately charged to Case 1 only

o $701.04 divided by 2 = $350.52. $350.52 + $555.34 erroneously charged to Case 3 = $905.86

Therefore, the Court rules on Defendants’ Motions for Attorneys’ fees and Plaintiff’s Motions to Tax Costs as follows:

In connection with Case #1, the Court grants the Association’s motion for attorneys’ fees in its entirety. The Association is awarded the requested $3,004,626 in attorneys’ fees.

In connection with Case #1, the Court grants in part and denies in part Plaintiff’s motion to tax costs. The Court awards the Association’s costs in the amount of $125,669.29, taxing $86,710.25 from the requested $212,379.54 as follows:

In Case #2, the Court denies the Association’s motion for attorneys’ fees in its entirety and grants Plaintiff’s motion to tax costs, taxing the $77,187.71 costs sought in its entirety. Although the Association is the prevailing defendant in the action, the Court does not find the action was frivolous, meritless, or vexatious.

In Case #3, the Court grants in part and denies in part Defendants’ motion for attorneys’ fees. The Court reduces from the $2,124,896.60 attorneys’ fees requested by $9,000 for excessive billing; $2,160 for improper overhead; and $2,920.50 for error billing. As such, Defendants are awarded attorneys’ fees in the amount of $2,110,816.10.

In connection with Case 3, the Court grants in part and denies in part Plaintiff’s motion to tax costs. The Court awards Defendants’ costs in the amount of $127,581.03, taxing $86,347.07 from the requested $213,928.10 as follows:

The Association shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

Further, the Court orders Defendants to file and serve proposed Orders and Amended Judgments in conformance with the Court’s ruling on or before December 20, 2024.

[1] At the time all three cases were filed, the jurisdictional maximum for a limited civil case was $25,000. That amount increased to $35,000 effective January 1, 2024.

[2] $3,262.50 in pre-offer expert fees + $75,347.25 in duplicate/erroneously allocated fees = $78,609.75.

[3] See fn.2.

DEPARTMENT	207
HEARING DATE	November 22, 2024
CASE NUMBERS	SC126981, 18SMCV00086, and 21SMCV00487
MOTIONS	(1) Motion for Attorney Fees (2) Motion to Tax Costs
MOVING PARTIES	(1) Defendant and Cross-Complainant The Ridge Condominium Association (2) Plaintiff and Cross-Defendant Hooman M. Melamed, MD
OPPOSING PARTY	(1) Plaintiff and Cross-Defendant Hooman M. Melamed, MD (2) Defendant and Cross-Complainant The Ridge Condominium Association