Judge Michael E. Whitaker, Case Number: 20STCV17331, Date: 2023-09-20 Tentative Ruling

Judge: Michael E. Whitaker, Case: 20STCV17331, Date: 2023-09-20 Tentative Ruling

This case arises from an accident during the construction of a new home in early 2019. Plaintiff Isac Hernandez (“Hernandez”), who suffered a fall during the construction, initiated the lawsuit against the project owners, Shane W. Josephs and Jennifer L. Josephs (the “Josephs”) on May 6, 2020. Subsequently, the Josephs (project owners) cross-complained against the general contractor, Zalman N., Inc. and Zalman T. Nemtzov (“Zalman”) and also substituted in via Doe amendments a subcontractor, MRB Construction and Marvin Ramos (“MRB”) for indemnity, etc. MRB (framing subcontractor) then cross-complained against the Josephs (project owner) and Zalman (general contractor) for indemnity, etc. Finally, Zalman (general contractor) cross-complained against Hernandez, the Josephs, and MRB.

In December 2021, the Court granted the Josephs’ motion for good faith settlement with Hernandez, effectively barring Zalman’s and MRB’s indemnity claims against the Josephs.[1] The Josephs did not seek entry of a final judgment as to Zalman or MRB with respect to their indemnity claims.

On July 25, 2023, the Court granted MRB’s motion for good faith settlement with Hernandez, effectively barring Zalman’s and the Joseph’s indemnity claims against MRB. MRB subsequently sought orders (1) dismissing Zalman’s cross-complaint (which contained only indemnity and related claims barred by virtue of the good faith settlement) with prejudice, and (2) entering judgment against the Josephs as to their indemnity cross claims against MRB, which are similarly barred by the good faith settlement. On August 8, 2023, the Court signed MRB’s proposed orders for entry of judgment against Zalman and the Josephs, which expressly state “MRB CONSTRUCTION, INC. and MARVIN RAMOS are entitled to recover costs per statute.”

On August 30, 2023, MRB submitted a memorandum of costs, seeking $64,805.69 in costs. The Josephs have now moved to strike and tax the costs MRB seeks. MRB has opposed the motion to tax costs and the Josephs have replied.

“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, subds. (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., 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 Med. Ctr. (2015) 237 Cal.App.4th 1217, 1224; Seever v. Copley Press, Inc. (2006) 141 Cal.App.4th 1550, 1557.)

The Josephs move to tax the costs on the grounds that (1) MRB is not a “prevailing party” entitled to costs as to the Josephs; (2) MRB wrongfully seeks to recover from the Josephs costs MRB incurred in defending against Hernandez’s complaint, not Josephs’ cross-complaint; (3) MRB wrongfully seeks to recover costs that were not reasonably necessary; and (4) the costs sought are unreasonable, excessive, and/or duplicative.

The Josephs argue that there is no “prevailing party” as between the Josephs and MRB because (1) each of them reached a good faith settlement with Hernandez, effectively cutting off each others’ indemnity claims; and (2) MRB is not yet the prevailing party because the Josephs’ writ petition is still pending and the Court has yet to sign the proposed judgment. The Josephs also argue that MRB’s recoverable costs against the Josephs and the Josephs’ recoverable costs against MRB should cancel each other out.

With regard to the Josephs’ first argument, MRB cites to Great Western Bank v. Converse Consultants, Inc. (1997) 58 Cal.App.4th 609, 614. Great Western held that, pursuant to the plain language of Code of Civil Procedure section 1032, a cross-defendant against whom the cross-complaint is dismissed as a result of a good faith settlement is a “prevailing party” because “it is a cross-defendant in whose favor a dismissal of the cross-complaint is entered.” (Ibid.) Great Western also pointed out that the appellate court also upheld a cost award to a cross-defendant resulting from a good faith settlement dismissal of a cross-complaint in Crib Retaining Walls, Inc. v. NBS/Lowry, Inc. (1996) 47 Cal.App.4th 886.

The Josephs argue on reply that they are each “prevailing parties” as a result of their respective good faith settlements with Hernandez, neither prevailing party was awarded the “net” monetary judgment, and therefore, the Josephs, as the first party to settle with Hernandez, should be considered the “prevailing party.” (Reply at p. 2:14-19.)

The Court finds that, per the plain language of the statute, and pursuant to Great Western and Crib Retaining, MRB is a prevailing party with respect to the Josephs’ cross-complaint against it, because the Josephs’ claims against MRB were dismissed as a result of MRB’s good faith settlement.

The Court disagrees with the Josephs’ argument that there are two prevailing parties to the action. “A cross-complaint is generally considered to be a separate action from that initiated by the complaint.” (Westamerica Bank v. MBG Industries, Inc. (2007) 158 Cal.App.4th 109, 134.) Thus, each cross-complaint “is a separate pleading and represents a separate cause of action […] and must be complete and sufficient by itself [….]” As such, MRB is the prevailing party as to the Josephs’ cross-complaint against it, which was dismissed as a result of MRB’s good faith settlement with Hernandez. While the Josephs may also be the prevailing party as to MRB’s complaint against them, the Josephs are not a prevailing party with respect to the “action” they brought (and which was dismissed) against MRB.

Therefore, with respect to the Josephs’ cross-complaint against MRB, MRB (including Ramos) is the “prevailing party” and the Josephs are not a “prevailing party” as to that action.

The Josephs’ second argument is that MRB is not yet the prevailing party, because of the Josephs’ pending writ petition and because the Court has not yet signed the final judgment. MRB argues in opposition that the pending writ does not impact their entitlement to costs, because proceedings are not automatically stayed pending writ proceedings, like they are for appeals. (Opp. at p. 5:5-15.) The Court agrees with MRB. The action is not stayed, automatically or otherwise, as a result of the Josephs’ pending writ petition. Moreover, under the plain language of the statute, MRB is a prevailing party. “Prevailing party includes […] a defendant in whose favor a dismissal is entered [….]” and “a defendant as against those plaintiffs who do not recover any relief against that defendant[.]” The Court ordered that judgment shall be entered against the Josephs on their cross-action against and in favor of MRB (including Ramos), that the Josephs shall receive nothing from MRB, and that MRB is entitled to recover costs per statute.

The Josephs third argument as to why MRB is not a prevailing party is that, because they are each able to recover costs as to the respective cross-complaints that were dismissed as a result of the good faith settlements, these costs effectively cancel each other out. MRB argues in opposition that the Josephs waived their right to recover costs in connection with MRB’s action, because they have now waited 1.5 years to seek a formal dismissal. Alternatively, if the Josephs can recover, MRB argues they would at most be entitled to an offset, and since the Josephs’ cross-complaint lasted 1.5 years longer than MRB’s, MRB has more costs to recover.

The Josephs argue on reply that permitting a party who refuses to settle for an additional year and a half to recover more costs as a result of their delay in settling would discourage settlement. The Josephs also point out that by settling after the Josephs, MRB obtained the benefit of the Josephs’ settlement, and as a result was able to settle for a lesser amount than the Josephs, and therefore it would be unfair to also reward them with additional costs incurred by their delay in settling.

The Court need not decide whether the Josephs’ delay in seeking an order of dismissal bars their entitlement to recover costs unless and until that issue is before it. However, the Court agrees with MRB that, to the extent the Josephs and MRB are each able to recover costs in connection with the respective cross-complaints that were dismissed as to each of them, the amounts would offset each other. The mere fact that two parties are each entitled to costs against each other with respect to two separate actions does not undermine either’s status as a prevailing party or otherwise invalidate their respective rights to recover costs as the prevailing party in their respective actions.

Therefore, MRB is the “prevailing party” entitled to recover its reasonable costs with respect to the Josephs’ cross-complaint against it.

The Josephs next contend that many of the costs sought pertain to costs MRB incurred in defending against the Hernandez’s complaint, not in defending against the Josephs’ claim for indemnity as to the $4,000,000 settlement they reached with Hernandez. Specifically, MRB seeks reimbursement for deposing Hernandez’s medical providers and other costs to defend against the underlying liability to Hernandez, not for deposing the Josephs or any costs incurred with the specific issues of indemnity to the Josephs.

MRB argues in opposition that apportionment of costs based on comparative fault is improper, and it is entitled to recover all its costs incurred.

While the Court agrees that costs are not apportioned with respect to comparative fault, the Court does not agree that MRB is entitled to recover from the Josephs all of the costs it incurred in connection with the entire case. As discussed above, each cross-complaint is its own separate action. (Westamerica Bank, supra, 158 Cal.App.4th at p. 134.)

As such, MRB, as the prevailing party with respect to the Josephs’ cross-complaint against it, is entitled to recover its reasonable costs incurred in connection with defending against that cross-complaint. But just as MRB would not be entitled to recover from the Josephs costs it incurred in connection with an entirely unrelated lawsuit, MRB is not entitled to recover costs it incurred in defending against Hernandez’s complaint. With respect to the action between Hernandez and MRB, the good faith settlement agreement between them provided that each side was to bear its own attorneys’ fees and costs incurred.

Therefore, while MRB is entitled to recover costs it incurred in defending against the Josephs’ cross-complaint for indemnity, MRB is not entitled to recover costs it incurred in defending against Hernandez’s complaint.

The Josephs similarly argue that many of the costs MRB lists, such as subpoena costs to obtain medical records from Hernandez’s medical providers, which could have been obtained directly from Hernandez in discovery, were not reasonably necessary to the litigation.

The Josephs have not demonstrated that the costs to subpoena medical records from Hernandez’s medical providers were not reasonably necessary to the litigation generally. However, to the extent MRB’s requested costs were not reasonably necessary to defend against the Josephs’ cross-complaint, such costs are improper.

The Josephs argue that some of the costs are unreasonable in amount, excessive, and/or duplicative. Specifically, (1) MRB does not explain why it subpoenaed Hernandez’s medical providers multiple times (some upwards of 5-10 times or more); (2) MRB requests interpreter fees incurred in August 2021 for Arnulfo Cerda, who was not deposed until December 2022; and (3) MRB seeks $7,457.40 in costs for Mr. Cerda’s 1-day zoom deposition, which is about double the cost of Zalman Nemtzov’s deposition, which lasted three days.

In opposition, MRB explains that the billing shows what the Josephs consider to be the “same” medical provider subpoenaed multiple times because of (1) the internal structure of the medical providers often requires that they subpoena each department separately; and (2) the attorney service bill also sometimes splits invoices into multiple categories, including subpoena preparation, subpoena service, custodian fee, and collection of records. The Court therefore finds that multiple entries for subpoenas to the same medical providers is not, in itself, unreasonably excessive or duplicative, under the circumstances presented.

With regard to Arnulfo Cerda’s deposition, MRB concedes it erroneously charged the court reporter’s $3,081.20 fee twice. As for the interpreter fee, MRB explains “the interpreter fees that day were for other purposes.” (Opp. at p. 8:24-25.) The Court finds that MRB is not entitled to count the court reporter’s fee twice, and MRB has not demonstrated that the interpreter fees it incurred in August 2021 for “other purposes” were reasonably incurred in defending against the Josephs’ cross-complaint.

Because the Court cannot reasonably discern which costs were incurred in defending against the Josephs’ cross-complaint versus which costs were incurred in defending against Hernandez’s complaint, the Court grants the Josephs’ request to strike the memorandum of costs without prejudice.

The Josephs shall provide notice of the Court’s ruling and file a proof of service regarding the same.

[1] A good faith settlement between Plaintiff and one or more (but not all) Defendant(s) discharges the settling defendant(s) from liability to other defendants for equitable contribution or comparative indemnity, but not contractual indemnity. (Code Civ. Proc. § 877.)

DEPARTMENT	207
HEARING DATE	October 12, 2023
CASE NUMBER	20STCV17331
MOTION	Motion to Tax Costs
MOVING PARTIES	Cross-Complainants Shane W. Josephs and Jennifer L. Josephs
OPPOSING PARTIES	Cross-Defendants MRB Construction, Inc. and Marvin Ramos