Judge Randolph M. Hammock, Case 20STCV30279 2023-05-03 Tentative Ruling

Plaintiff DC Partners, Inc. dba Soligen 2006 (“Soligen”) alleged that Defendant Eaton Aerospace, LLC (“Eaton”) was indebted to Soligen in the amount of $183,481.06 plus interest based on component parts Soligen supplied Eaton. The operative First Amended Complaint contained common count causes of action for (1) Goods Sold and Delivered, (2) Account Stated, and (3) Open Book Account.

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.

“Because section 1717 only applies to an action ‘on a contract,’ the statute and its reciprocity rules do not apply to claims for fees for tort or other non-contract claims.” (Hom, supra, 67 Cal. App. 5th at 465.) But “California courts liberally construe the term ‘on a contract’ in Civil Code section 1717.” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.) “‘As long as the action “involve[s]” a contract, it is “ ‘on [the] contract’ ” within the meaning of section 1717.’ ” (Id.) “To determine whether an action is on the contract, we look to the complaint and focus on the basis of the cause of action. [Citations.] Any action that is based on a contract is an action on that contract regardless of the relief sought.” (Yoon v. Cam IX Tr. (2021) 60 Cal. App. 5th 388, 392.)

The first issue is whether this action was one “on a contract.” Plaintiff argues it is “undisputed that a contract between the parties existed,” and that this controlling contract was Plaintiff’s “Quote for Purchase.” (Mtn. 5: 4-5.) Plaintiff argues its “Quote for Purchase” “allows [it] to recover its attorney’s fees and costs incurred in bringing this action. Plaintiff also contends that Defendant “never approached Soligen with an issue about its terms [and] conditions presented” in the Quotes. Rather, Defendant issued a purchase order in response in response to the Quote, “thereby agreeing to do business with Soligen, and in agreement with Soligen’s contract terms.” (Mtn. 5: 21-22.)

Defendant, on the other hand, argues section 1717 is inapplicable here. Defendant notes that Plaintiff’s action was one for common count, not breach of contract. Defendant contends Plaintiff therefore “waived any contract-based claims or related recovery at the outset.” (Opp. 1: 18-19.) Defendant asserts then that Soligen’s action is not “on a contract” and that Soligen did not incur attorney’s fees to “enforce that contract.” (Opp. 1: 20-22; Civ.Code § 1717(a), (b).)

First, there is no obvious controlling written contract in this matter. Plaintiff brought this matter for account stated, not breach of contract. The controlling First Amended Complaint in this matter provided three common count causes of action for (1) goods and services rendered, (2) open book account, (3) and account stated.

“ ‘The common count is a general pleading which seeks recovery of money without specifying the nature of the claim.” (Title Ins. Co. v. State Bd. of Equalization (1992) 4 Cal.4th 715, 731.) A common count action “is governed by principles of equity. It may be brought ‘wherever one person has received money which belongs to another, and which “in equity and good conscience,” or in other words, in justice and right, should be returned.” (Mains v. City Title Ins. Co. (1949) 34 Cal.2d 580, 586 [internal citations omitted].) “[S]ince the basic premise for pleading a common count . . . is that the person is thereby ‘waiving the tort and suing in assumpsit,’…excluded are damages for a breach of an express contract. The relief is something in the nature of a constructive trust and . . . ‘one cannot be held to be a constructive trustee of something he had not acquired.’ One must have acquired some money which in equity and good conscience belongs to the plaintiff or the defendant must be under a contract obligation with nothing remaining to be performed except the payment of a sum certain in money.” (Zumbrun v. University of Southern California (1972) 25 Cal.App.3d 1, 14–15 [internal citations omitted].) “[A] party need not prove the existence of a contract [citations], but it must show the circumstances were such that ‘the services were rendered under some understanding or expectation of both parties that compensation therefor was to be made.’ ” [Citation.]” (E. J. Franks Construction, Inc. v. Sahota (2014) 226 Cal.App.4th 1123, 1127–1128.)

Each common count was based on the general allegation that Defendant had become indebted to Plaintiff in the sum of $183,481.06. (FAC ¶¶ 5, 8, 11.) Plaintiff did not identify the contract(s) at issue in the FAC. At trial, there was a factual dispute as to which contracts were actually at issue, which invoices were paid in full, and which invoices, out of certain unpaid invoices at issue, justified payment. Indeed, the damages sought by Plaintiff have fluctuated. This was not a simple contract matter.

Be that as it may, it would appear that one or more contracts existed between the parties, either express or implied, based on Plaintiff having provided goods to Defendant in the first place. Because this court must “liberally construe the term ‘on a contract’,” it finds that the action here “involved a contract.” (Blickman Turkus, LP, supra, 162 Cal.App.4th at 894.) This is true even though Plaintiff did not seek relief for breach of contract. (Yoon, supra, 60 Cal. App. 5th 388, 392.)

The next issue is whether Plaintiff is the “prevailing” party in this action. There is little doubt that Plaintiff prevailed here. Indeed, the jury found in Plaintiff’s favor and against Eaton, awarding Plaintiff damages in excess of those sought in the First Amended Complaint. (See Judgement, 01/23/2023.) In other words, Plaintiff received exactly what it wanted and then some. Plaintiff is therefore the prevailing party.

Assuming this action was one “on a contract,” and given the fact that Plaintiff was the “prevailing party” in the action, the final issue this court must address is which contract(s), if any, and terms govern. Put differently, does the controlling contract “specifically provide[]” for recovery of attorney’s fees and costs? (CCP § 1717(a).)

The parties have presented more than one document in this litigation and at trial purporting to reflect the negotiated terms of the agreements between the parties. Where possible, “[s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.” (Civ. Code, § 1642.; R.W.L. Enterprises v. Oldcastle, Inc. (2017) 17 Cal. App. 5th 1019, 1027.) “Under traditional common law, no contract was reached if the terms of the offer and the acceptance varied. [Citation.] An acceptance containing additional terms was viewed as ‘both a rejection of the offer and a counteroffer.’ [Citation.] The California Uniform Commercial Code rejects this mirror image rule in the commercial context, where its strict application would be ‘both unfair and unrealistic.’ [Citation.] Section 2207 considers ‘whether the parties intended to complete an agreement.’ [Citation.] An acceptance or confirmation is valid even if it contains additional terms ‘unless acceptance is expressly made conditional on assent to the additional or different terms.’ (R.W.L. Enterprises v. Oldcastle, Inc. (2017) 17 Cal. App. 5th 1019, 1032 [citations omitted]; see Cal. U. Com. Code § 2207, subd. (1).))

As discussed herein, the evidence does not preponderate that the parties did, in fact, intend to complete any agreement. Moreover, it would not be “unfair and unrealistic” for this Court to actually apply the “mirror image rule” in this specific case. In fact, it would be “unfair and unrealistic” not to do so. This conclusion is based primarily on the fact that there was never a cause of action even alleged for any breach of contract whatsoever.

Be that as it may, Plaintiff relies on its “Quote” which contains a provision allowing recovery of attorney’s fees. On the other hand, Defendant notes that its Purchase Orders (“POs”) and related Terms and Conditions (“T&Cs”)—which the parties agree Defendant issued after and in response to Soligen’s Quotes—“explicitly rejected all proposed terms and conditions contained within Soligen’s quotes, including Soligen’s ability to recover attorney’s fees and collection costs.” (Opp. 1: 26-27.)

The Plaintiff’s motion includes zero legal authority addressing how the court is tasked to resolve the conflicting terms in this case. Rather, it contends summarily that there is “no doubt” its Quote—which provides for the recovery of attorney’s fees—should govern now. (Mtn. 5: 6.) But “failure to offer reasoned analysis of [an] issue constitutes a waiver.” (Trinity Risk Management, LLC v. Simplified Labor Staffing Solutions, Inc. (2021) 59 Cal.App.5th 995, 1009; see also In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830 [“[t]he absence of cogent legal argument or citation to authority allows this court to treat the contentions as waived.”])

Finally, in its supplemental brief, Defendant contends that the California Commercial Code section 2201(3) is applicable here, because Plaintiff’s Quote “falls under the Statute of Frauds.” (P’s Supp. Brief 3: 14-15.) But it is unclear why this has any relevance. The statute of frauds “merely serve[s] an evidentiary purpose.” (Sterling v. Taylor (2007) 40 Cal. 4th 757, 766.) The statute of frauds and codified counterpart in the Commercial Code serve “only to prevent [a] contract from being unenforceable,” but do “not necessarily establish the terms of the parties’ contract.” (Id. [emphasis added].)

There is no dispute here that Plaintiff manufactured goods pursuant to Defendant’s request. There is no dispute that Defendant requested specialized goods. But the issue, and what Defendant fails to address again in its supplemental brief, are which terms should govern that agreement. The issue here has nothing to do with the enforceability of that agreement.

Plaintiff’s reliance on Commercial Code section 2206(2) is equally without merit. That section provides: “[w]here the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.” (Com. Code § 2206(2).) This section does nothing to shed light on the terms of the contract or Plaintiff’s right to attorney’s fees.

[I]n any action on a contract based on a book account,…which does not provide for attorney’s fees and costs, as provided in Section 1717, the party who is determined to be the party prevailing on the contract shall be entitled to reasonable attorney’s fees, as provided below, in addition to other costs. The prevailing party on the contract shall be the party who recovered a greater relief in the action on the contract…

Reasonable attorney’s fees awarded pursuant to this section for the prevailing party bringing the action on the book account shall be fixed by the court in an amount that shall not exceed the lesser of: (1) nine hundred sixty dollars ($960) for book accounts based upon an obligation owing by a natural person for goods, moneys, or services which were primarily for personal, family, or household purposes; and one thousand two hundred dollars ($1,200) for all other book accounts to which this section applies; or (2) 25 percent of the principal obligation owing under the contract.

Defendant does not persuasively dispute the application of section 1717.5 but contends the fee would be unjust because Plaintiff did not request it until its supplemental brief. Be that as it may, an award is mandatory under this section. (See § 1717.5 [“party prevailing on the contract shall be entitled to reasonable attorney’s fees”].) It is also respectfully submitted that $1,200, in light of a jury verdict over $200,000.00, is largely de minimis and hardly unjust. After all, Plaintiff’s operative FAC sought attorney’s fees, albeit through a different code section.

In general, the prevailing party is entitled as a matter of right to recover costs for suit in any action or proceeding. (Code Civ. Proc., §1032(b); Santisas v. Goodin (1998) 17 Cal.4th 599, 606; Scott Co. Of Calif. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1108.) With regard to the definition of “prevailing party”, section 1032(a)(4) provides that:

“‘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.”

Allowable costs under Code of Civil Procedure section 1033.5 must be reasonably necessary to the conduct of the litigation, rather than merely convenient or beneficial to its preparation, and must be reasonable in amount. An item not specifically allowable under section 1033.5(a) nor prohibited under subdivision (b) may nevertheless be recoverable in the discretion of the court if they meet the above requirements (i.e., reasonably necessary and reasonable in amount). (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-774.) In determining litigation success, Courts should “respect substance rather than form” and consider “the unique facts and circumstances of each case.” (Marina Pacifica Homeowners Assn. v. S. California Fin. Corp. (2018) 20 Cal. App. 5th 191, 206.) When the items on the verified cost bill appear to be proper, the burden of proof is on the contesting party. (Fennessy v. Deleuw-Cather Corp. (1990) 218 Cal. App. 3d 1192.)

Defendant also moves to tax the costs, perhaps mislabeled in the Cost Memorandum, in paragraphs 14 and 15 as electronic “filing” or “hosting” fees. But Plaintiff explains these fees, like the others, are charged by Journal Technologies, the Electronic Filing Service Provider. (Opp. 5: 21-23.) The fees are therefore more properly characterized as “filing, motion, and jury fees,” and are therefore recoverable. (§ 1033.5(a)(1).)

Plaintiff filed a Motion to Compel Eaton’s Further Responses to Soligen’s Requests for Production of Documents, Set One. When the matter came for hearing, this court instructed Plaintiff to submit a supplemental separate statement and continued the hearing. Soligen then failed to appear and had not filed a supplemental separate statement addressing what remaining discovery issues needed to be ruled on. The court therefore took Plaintiff’s motion off-calendar. (02/08/2022 Order.) Plaintiff filed a motion for reconsideration, which this court denied for the same reasons expressed when initially taking the motion off-calendar. This court would agree that this was an example of an unreasonable cost that is not compensable. Thus, items 1(n) and 1(o) are stricken/taxed.

Similarly, Defendant correctly notes that it was unreasonable for Plaintiff to bring a second motion for leave to file a second amended Complaint after there had been no material change in circumstances following the first unsuccessful motion for leave. The costs incurred in the second motion are not recoverable. Thus, items 1(t) and 1(v) are stricken/taxed.

The same is true of Plaintiff filing a second Statement of Disqualification for Cause, which improperly sought review of the order striking the first statement of disqualification. Hence, that too, was stricken. Neither of those motions, including service of process fees, are recoverable. Thus, items 1(u), 1(w), 1(y), 1(z), 5(b), 5(c), and 16(b) are stricken/taxed.

Costs for models, enlargements, photocopies, and the like are recoverable “if they were reasonably helpful to aid the trier of fact.” (CCP 1033.5(a)(13).) Plaintiff seeks fees for “Plaintiffs Exhibit Book; Defendants Exhibit Books; Court Copies of Certified Transcript of Tinniste Depo Vol I, II, III to Lodge.” (Costs Worksheet, 11.)

There appears to be a dispute as to which Exhibits were used at trial. Be that as it may, Plaintiff presents evidence that it prepared and printed the exhibits (Simons Decl. ¶ 8.) Absent conclusive evidence that the exhibits were not used or were not otherwise “reasonably helpful to aid the trier of fact,” the costs are recoverable.

Defendant also objects to miscellaneous trial expenses, including food, parking, and postage costs. (Memorandum of Costs, Attachment 16.) At least a portion of the “Miscellaneous Attorney Costs” includes “[o]vernight mail.” (Id.) Postage is not an allowable cost. (CCP § 1033.5(b)(2).) As Plaintiff provides no evidence to apportion which of the $58.29 went to nonrecoverable postage fees as opposed to that which may be recoverable as a cost “reasonably necessary to the conduct of the litigation,” this section is taxed/stricken. (CCP 1033.5(c)(2).)

Plaintiff seeks to recover $44,543.20 for expert fees. (Memorandum of Costs, Attachment 16.) “Recoverable costs generally do not include the fees of expert witnesses not ordered by the court.” (Kahn v. The Dewey Grp. (2015) 240 Cal. App. 4th 227, 237 [citing CCP §§ 1032, 1033.5, subd. (b)(1)].) Such expert witness fees are recoverable in some circumstances, however, when a more favorable judgment for the defendant follows a defendant’s rejection of the plaintiff’s pretrial section 998 settlement offer, thus triggering section 998's cost-shifting provisions. As relevant here, section 998, subdivision (d), provides:

If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award…,the court…, 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.

Here, Plaintiff made the only section 998 offer in this case, seeking $600,000 including attorney’s fees and costs. (Golodnitska Decl. ¶ 15.) Defendant did not accept the offer. Plaintiff was eventually awarded $212,981.00 at trial. (See 01/23/2023 Judgment.) As already discussed herein, Plaintiff is not entitled to recover its attorney’s fees, aside from the $1,200 statutory award. Once all is said and done, Defendant did obtain “a more favorable judgment” than Plaintiff’s 998 offer. (§ 998(d).) [FN 2] Thus, section 998 is inapplicable on these facts, and Plaintiff has cited no other statute permitting recovery of expert fees. For these reasons, the court need not address whether the section 998 offer was reasonable or made in good faith, or how this Court should exercise its discretion to award same..

This Court is left to wonder why many of these seemingly paltry costs (e.g., electronic filing fees, motion fees and miscellaneous fees) were even attempted to be taxed in the first place. There can be no doubt that vastly more money was spent by the Defendant in attorney’s fees to attack those particular de minmus costs, than the costs themselves. At best, Defendant may have obtained a Pyric victory as to some of those costs. So be it.

This appears to end this Court’s involvement in this case for now. Of course, this Court does recognize that its rulings for these instant motions are certainly subject to appeal. Be that as it may, this Court can only hope that the parties can resolve these issues without the need for such appeals, and they can merely part ways with certain knowledge in the future to assist them in their own respective businesses. In such an event, something positive could come out of this rather contentious litigation.

Judge of the Superior Court

FN 1 - For example: Would the Plaintiff’s unsuccessful attempts [plural] to disqualify this Court under CCP section 170.1/170.3 be considered reasonable attorney’s fees to be fairly charged to the Defendant in this particular case? The same issue would also be presented as to the unsuccessful attempts [once again, plural] to amend the complaint to add a RICO cause of action. Was that reasonable? A RICO cause of action! This Court notes that considerable attorney’s fees are being requested to be awarded in those specific and specious efforts. (See, e.g., Declaration of Steven A. Simons, Exhibit “A”, 06/09/2022 through 08/22/2022)

FN 2- Moreover, even if this Court had actually granted the Plaintiff’s request for all attorney’s fees and costs it sought in its motion, to wit, $325,443.51, when you add that amount to the jury verdict of $212,981.00, you still arrive at a total amount of less than $600,000.00.