Judge: Michael P. Linfield, Case: 22STCV16148, Date: 2023-08-08 Tentative Ruling
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Case Number: 22STCV16148 Hearing Date: March 29, 2024 Dept: 34
SUBJECT: Motion for Attorney’s Fees
Moving Party: East
West Bank
Resp. Party: Morillo Construction, Inc.
SUBJECT: Motion to Tax Costs
Moving Party: Morillo
Construction, Inc.
Resp. Party: East West Bank
SUBJECT: Motion to Tax Costs
Moving Party: Morillo
Construction, Inc.
Resp. Party: Wells Fargo Bank, National Association
East West Bank’s Motion for Attorney’s Fees
is DENIED.
Morillo Construction’s Motion to Tax East West’s
Costs is GRANTED in part. East West’s costs are TAXED by $511.34. Costs are
AWARDED in favor of East West and against Morillo in the total amount of
$4,562.98.
BACKGROUND:
On May 13, 2022, Morillo Construction,
Inc. (“Morillo”) filed its Complaint against Defendants Royal Construction
& Architectural Corporation (“Royal”); Eva Neumann; Wells Fargo Bank,
National Association (“Wells Fargo”); Western Surety Company (“Western Surety”);
and East West Bank (“East West”).
On June 10, 2022, Western Surety filed:
(1) General Denial of the Complaint; and (2) Verified Cross-Complaint against
Royal and Morillo (“Western Surety’s Cross-Complaint”).
On July 13, 2022, Morillo filed its
Verified Answer to Western Surety’s Cross-Complaint.
On August 3, 2022, East West filed: (1)
Answer to the Complaint; and (2) Cross-Complaint against Wells Fargo, Royal,
and Eva Neumann (“East West’s Cross-Complaint”).
On August 8, 2022, by request of
Morillo, the Clerk’s Office dismissed without prejudice Wells Fargo from the
Complaint.
On November 13, 2023, the Court: (1)
granted summary judgment in favor of East West and against Morillo on the
second and third causes of action in the Complaint; and (2) granted summary
judgment in favor of Wells Fargo and against East West on East West’s
Cross-Complaint.
On November 21, 2023, the Court entered
Judgment in favor of East West and against Morillo on the second and third
causes of action in the Complaint. The Court decreed that East West is the
prevailing party against Morillo, that Morillo is to recover nothing from East
West, and that East West is entitled to recover its costs and fees incurred
upon application to the Court.
On November 22, 2023, Royal and Eva
Neumann filed their Amended Answer to the Complaint.
On November 22, 2023, Royal filed its
Cross-Complaint against Morillo (“Royal’s Cross-Complaint”).
On November 30, 2023, the Court entered
Judgment in favor of Wells Fargo and against East West on East West’s
Cross-Complaint. The Court decreed that Wells Fargo is the prevailing party
against East West, that East West is to recover nothing from Wells Fargo, and
that Wells Fargo is entitled to recover its reasonable costs incurred upon
application to the Court.
On December 6, 2023, East West filed its
Judicial Council Form MC-010, Memorandum of Costs (Summary) (“East West’s
Memorandum”).
On December 14, 2023, Wells Fargo filed
its Judicial Council Form MC-010, Memorandum of Costs (Summary) (“Wells Fargo’s
Memorandum”).
On December 26, 2023, Morillo filed its
Motion to Tax Costs (“Motion to Tax East West’s Costs”).
On December 27, 2023, Morillo filed its
Answer to Royal’s Cross-Complaint.
On January 3, 2024, Morillo filed its
Motion to Tax Costs (“Motion to Tax Wells Fargo’s Costs”).
On January 18, 2024, East West filed its
Motion for Attorney’s Fees.
On January 26, 2024, East West filed its
Amended Memorandum of Costs (Summary) (“East West’s Amended Memorandum”).
On February 2, 2024, Wells Fargo filed
its Memorandum of Costs (Summary) (“Wells Fargo’s Amended Memorandum”).
On February 6, 2024, East West filed its
Opposition to the Motion to Tax East West’s Costs (“Opposition”).
On February 13, 2024, Morillo filed its
Reply in support of its Motion to Tax East West’s Costs (“Reply”).
On March 18, 2024, Morillo filed its
Opposition to the Motion for Attorney’s Fees. Morillo concurrently filed
Declaration of Ryan A. Baggs.
On March 22, 2024, East West filed its
Reply in Support of Motion for Attorney’s Fees.
On March 28, 2024, Morillo withdrew its Motion
to Tax Costs against Wells Fargo Bank.
ANALYSIS:
I.
Motion for Attorney’s Fees
A. 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).)
Attorneys’ fees are allowed as costs
when authorized by contract, statute, or law. (Code Civ. Proc, § 1033.5, subd.
(a)(10)(B).)
“In any action on a contract, where the
contract specifically provides that attorney’s fees and costs, which are
incurred to enforce that contract, shall be awarded either to one of the
parties or to the prevailing party, then the party who is determined to be the
party prevailing on the contract, whether he or she is the party specified in
the contract or not, shall be entitled to reasonable attorney’s fees in
addition to other costs. Where a contract provides for attorney’s fees, as set
forth above, that provision shall be construed as applying to the entire
contract, unless each party was represented by counsel in the negotiation and
execution of the contract, and the fact of that representation is specified in
the contract. Reasonable attorney’s fees shall be fixed by the court, and shall
be an element of the costs of suit. Attorney’s fees provided for by this
section shall not be subject to waiver by the parties to any contract which is
entered into after the effective date of this section. Any provision in any
such contract which provides for a waiver of attorney’s fees is void.” (Civ.
Code, § 1717, subd. (a), paragraph breaks omitted.)
B. Discussion
1. The
Parties’ Arguments
East West moves the Court for $197,648.00 in
attorney’s fees for the work done on this matter, plus an additional $8,190.00
in connection with the Motion for Attorney’s Fees. (Motion for Attorney’s Fees,
pp. 9:7, 9:17–22, 10:4, 10:7–11.) East West argues that it is entitled to
recover these fees pursuant to Code of Civil Procedure sections 1032 and
1033.5, and Civil Code section 1717. (Id. at pp. 4:2–3, 4:14–15, 6:19.)
Morillo disagrees,
arguing: (1) that the indemnity provision relied upon by East West does not
apply; (2) that the Court should deny the attorneys’ fees motion, or
significantly reduce any award, because East West’s requests are often
unidentifiable, excessive, unreasonable, and duplicative; and (3) that East
West should not be awarded any fees for its action against Wells Fargo.
(Opposition to Motion for Attorney’s Fees, pp. 5:1–2, 6:23–26, 17:1–2.)
In its Reply, East West
argues: (1) that the Court should grant the motion on the grounds that the
indemnification provision of the deposit agreement is controlling and
applicable to the contract claims filed by Morillo against East West; (2) that
the legal invoices in support of the motion sufficiently and adequately detail
the necessary billing information for reasonable attorneys’ fees; and (3) that
the Court should grant the motion for the full amount of the reasonable
attorneys’ fees sought, without reduction. (Reply in support of Motion for
Attorney’s Fees, pp. 2:1–5, 6:1–4, 8:21–23.)
2. Prevailing
Party
a. Legal
Standard
“‘Prevailing party’ includes the
party with a net monetary recovery, a defendant in whose favor a dismissal is
entered, 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. If any party recovers other than monetary relief and in
situations other than as specified, the ‘prevailing party’ shall be as
determined by the court, and under those circumstances, the court, in its
discretion, may allow costs or not and, if allowed, may apportion costs between
the parties on the same or adverse sides pursuant to rules adopted under
Section 1034.” (Code Civ. Proc., § 1032, subd. (a)(4).)
b. Discussion
On November 21, 2023, the Court entered
Judgment in favor of East West and against Morillo on the second and third
causes of action in the Complaint. As declared at that time by the Court, East
West is the prevailing party against Morillo.
3. Authority
for Fees
The Parties disagree about whether there is
authority for the recovery of attorney’s fees here.
The following is the
relevant portion of the Parties’ Deposit Agreement.
“Indemnification — Except as otherwise set forth in this Agreement, you
agree to indemnify, defend and hold us harmless from all claims, actions,
proceedings, fines, costs and expenses (including, without limitation, attorney
fees) related to or arising out of: (a) your actions and omissions in
connection with your accounts or our services, (b) assertions that we are
responsible or legally liable for actions or inactions by you, including
without limitation that actions or inactions were not authorized or violated
the rights of owners of the account, payees, or makers of items deposited or
withdrawn, or other third parties, and (c) our actions and omissions, provided
that they are taken/omitted in accordance with this Agreement or your
Instructions. This provision shall survive the termination of this Agreement.”
(Motion for Attorney’s Fees, Exh. A, p. 10 [actual page 29 of 134].)
“Generally,
an indemnification provision allows one party to recover costs incurred
defending actions by third parties, not attorney fees incurred in an action
between the parties to the contract. Courts look to several indicators to
distinguish third party indemnification provisions from provisions for the
award of attorney fees incurred in litigation between the parties to the
contract. The
key indicator is an express reference to indemnification. A clause that
contains the words ‘indemnify’ and ‘hold harmless’ generally obligates the
indemnitor to reimburse the indemnitee for any
damages the indemnitee becomes obligated to pay third persons—that is, it
relates to third party claims, not attorney fees incurred in a breach of
contract action between the parties to the indemnity agreement itself.” (Alki
Partners, LP v. DB Fund Servs., LLC (2016) 4 Cal.App.5th 574, 600,
citations omitted.)
“Courts
also examine the context in which the language appears. Generally, if the surrounding
provisions describe third party liability, the clause will be construed as a
standard third party indemnification provision. The
court will not infer that the parties intended an indemnification provision to
cover attorney fees between the parties if the provision
does not specifically provide for attorney's fees in an action on the contract.”
(Alki Partners, LP, supra, at pp. 600–601, italics, quotation,
and internal quotation marks omitted.)
Courts of Appeal have
repeatedly revisited this issue and provided the exact contractual language
that they have considered. (See, for example: Alki Partners, supra,
at p. 598; Queen Villas Homeowners Ass’n v. TCV Prop. Mgmt. (2007) 149
Cal.App.4th 1, 4; Carr Bus. Enters., Inc. v. City of Chowchilla (2008)
166 Cal.App.4th 14, 19–20; Baldwin Builders v. Coast Plastering Corp. (2005)
125 Cal.App.4th 1339, 1345.)
There are four facts worth noting about the clause
at issue in this matter:
(1) it is titled
“Indemnification”;
(2) it uses the phrase “indemnify, defend and hold us harmless”;
(3) it lists examples of all the ways in which Morillo is to indemnify,
defend, and hold East West harmless; and
(4) it does not have a separate sentence or clause for claims that are
brought in an action against the contract itself.
When the Court compares this clause with the
various indemnification clauses considered by the various Courts of Appeal, it
is clear that this clause is merely a third-party indemnification clause and
not an attorney’s fees provision for actions between the Parties to the Deposit
Agreement.
The Court has received no evidence of a
contractual attorney’s fees provision between the Parties (nor any other
authority in contract, statute, or law) to allow it to deviate from the American
Rule that each party bear’s its own attorney’s fees.
C. Conclusion
The Motion for Attorney’s Fees is DENIED.
II. Motion to Tax
East West’s Costs
A. 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).)
Prevailing
parties seeking to claim costs must comply with California Rules of Court, rule
3.1700(a), and parties seeking to contest costs must comply with California
Rules of Court, rule 3.1700(b).
The Court separately considers each category of contested costs,
including: (1) whether they are specifically allowable or specifically
prohibited; (2) whether they were incurred, whether or not paid; (3) whether
they were reasonably necessary to the conduct of the litigation rather than
merely convenient or beneficial to its preparation; and (4) whether they are
reasonable in amount. (Code Civ. Proc., §§ 1033.5, subds. (a), (b), and
(c)(1)–(3).
“Items not mentioned in this section and items assessed upon
application may be allowed or denied in the court’s discretion.” (Code Civ.
Proc., § 1033.5, subd. (c)(4); see also Foothill-De Anza Cmty. Coll.
Dist. v. Emerich (2007) 158 Cal.App.4th 11, 30.)
B. Discussion
1. The
Parties’ Arguments
East West initially claims $7,076.03 in
costs, which are comprised of:
(1) $455.00 in filing
and motion fees;
(2) $3,687.00 in
deposition costs;
(3) $162.68 in service
costs;
(4) $138.05 in costs
for court-ordered transcripts;
(5) attorney’s fees (by
separate motion);
(6) $258.30 for
electronic filing or service fees; and
(7) $2,375.00 in
“other” costs.
(East West’s Memorandum, p. 1.)
Morillo moves the Court to
tax: (1) the deposition costs; (2) the court-ordered transcript costs; and (3)
the mediation fees which comprise of all the “other” costs. (Motion to Tax East
West’s Costs, p. 2:8–11.)
After Morillo filed its
motion, but before East West filed its Opposition, East West amended its
MC-010. The amendments included: (1) omitting the $2,375.00 in mediation costs
from the “other” category; (2) moving the $138.05 in court-ordered transcripts
to the “other” category; and (3) adding $373.29 in court reporter fees. (East
West’s Amended Memorandum, p. 1.)
In its Opposition, East
West argues: (1) that the Motion to Tax East West’s Costs is now moot because
East West filed East West’s Amended Memorandum; (2) that the requested costs
are necessary and the Court has discretion to approve them; and (3) that East
West is the prevailing party and therefore is entitled to recover all
reasonable costs incurred. (Opposition, pp. 3:2–3, 3:20–22, 4:3–5.)
In its Reply, Morillo
argues: (1) that the Motion to Tax East West’s Costs is not moot; and (2) that
East West is not entitled to the costs for depositions and transcripts. (Reply,
p. 2:9–10, 2:18.)
2. East
West is Entitled to Costs as the Prevailing Party
The Court agrees with the
argument that East West is entitled to its costs as a prevailing party. (Code Civ.
Proc., § 1032, subd. (b).)
3. Mootness
of the Motion
The Court does not agree
that the Motion to Tax East West’s Costs is now moot because East West filed an
amended memorandum.
Given the minimal changes at issue, it would
be a waste of time for the Court to deny as moot the motion because the Court
would simply allow leave for a motion to tax to be filed based on the amended
memorandum.
Moreover, the due process issue here is
minimal because (1) both sides still had at least one chance to respond to the
amended memorandum and (2) the non-moving party only objects to the substance
of the memorandum (but not the act of amending).
4. Mediation
Costs
The mediation cost issue
is now moot because East West omitted that cost item from East West’s Amended
Memorandum. (The Court notes that the Court did not order mediation and would
have declined to exercise its discretion to allow these costs.)
5. Deposition
Costs
The deposition costs of
$3,687.00 are the costs incurred for depositions of Pierre Morillo, Eva
Neumann, Jennifer Cheung, and Ramesh Sharma. (East West’s Memorandum, Item 4;
East West’s Amended Memorandum, Item 4.)
The Court finds that these costs were
reasonable and will allow them.
6. Transcript
Costs
“Transcripts of court proceedings ordered by the court” are
specifically allowable costs, while “[t]ranscripts of court proceedings not
ordered by the court” are specifically prohibited, except where expressly
authorized by law. (Code Civ. Proc., § 1033.5, subds. (a)(9), (b)(5).
The Court did not order any transcripts, and East West has not pointed
to any law that specifically authorizes the recovery of these costs in absence
of the Court ordering the transcripts. Thus, the transcript costs are not
recoverable.
The Court taxes these costs.
7.
Court
Reporter Costs
“Court reporter fees as established by
statute” are allowable as costs. (Code Civ. Proc., § 1033.5, subd. (a)(11).)
The
Court did not order court reporting, and East Wets has not pointed to any law
that specifically authorizes the recovery of these costs in absence of the
Court ordering court reporting. The Court declines to exercise its discretion
to allow these costs.
The Court taxes these
costs.
C. Conclusion
The Court GRANTS in part the Motion to Tax
East West’s Costs. The Court TAXES East West’s costs by $511.34. The Court
AWARDS costs in favor of East West and against Morillo in the total amount of
$4,562.98.
III. The Motion to
Tax Wells Fargo’s Costs
This Motion was withdrawn by
Morillo on March 28, 2024.