Judge Theresa M. Traber, Case 19STCP01994 2023-04-25 Tentative Ruling

Judge: Theresa M. Traber, Case: 19STCP01994, Date: 2023-04-25 Tentative Ruling

Case Number: 19STCP01994 Hearing Date: April 25, 2023 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: April 25, 2023 JUDGMENT: January 13, 2023

CASE: Ann M. Simons, individually and as the Designated Representative of Family 3 v. The Enterprise, et al.

CASE NO.: 19STCP01994

MOTION TO STRIKE OR TAX MEMORANDUM OF COSTS

MOVING PARTY: Petitioner Ann M. Simons and Interested Parties Jordan Simons and Jennifer Simons-Luchs

RESPONDING PARTY(S): Respondents/Cross-Petitioners The Enterprise; Gilad Lumer, individually and as the Designated Family Representative of Family 1; Harry Lumer, Sr., individually and as the Designated Family Representative of Family 2; Stuart Rubin, individually and as a Representative of Family 4; and David Wank, individually and as the Representative of Family 5.

CASE HISTORY:

· 05/21/19: Petition to Vacate or Alter Arbitration Award filed.

· 06/28/19: Cross-Petition to Confirm Arbitration Award filed.

12/06/21 Remittitur issued
01/13/23: Judgment Entered

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This action arose out of a dispute regarding a family business. The parties and their families owned a business known as “The Enterprise.” Petitioner Ann Simons was fired as part of a restructuring and initiated the underlying arbitration more than ten years ago. Phase I concluded in 2010 and the arbitration award was confirmed by Department 36 (Alarcon, J.). Phase II concluded in 2019, when Phase III had yet to take place. The Court confirmed the Phase II arbitration award and Petitioner appealed. The Court of Appeal upheld the Court’s order confirming the award. The Phase III award was confirmed in November of last year, and the Final Award was confirmed on December 2, 2022.

Petitioner/Judgment Debtor now moves to strike or tax Respondents/Judgment Creditors’ Memorandum of Costs.

TENTATIVE RULING:

Petitioner’s Motion to Strike or Tax the Memorandum of Costs is GRANTED.

DISCUSSION:

Petitioner/Judgment Debtor moves to strike or tax Respondents/Judgment Creditors’ Memorandum of Costs.

Legal Standard

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.) Assuming the “prevailing party” requirements are met, the trial court has no discretion to order each party to bear his or her own costs of suit. (Michell v. Olick (1996) 49 Cal.App.4th 1194, 1198; Nelson v. Anderson (1999) 72 Cal.App.4th 111, 129.) A defendant who is dismissed from the action is the “prevailing party.” (Code Civ. Proc. §1032(a)(4).) This is so whether the dismissal is voluntary or involuntary. (Santisas, 17 Cal.4th at 606.)

Allowable costs under 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 it meets the above requirements (i.e., reasonably necessary and reasonable in amount). If 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. (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-774.) 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. (Ibid.) 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. (Ibid.) However, because the right to costs is governed strictly by statute, a court has no discretion to award costs not statutorily authorized. (Id.) Discretion is abused only when, in its exercise, the court “exceeds the bounds of reason, all of the circumstances being considered.” (Ibid.)

Timeliness of Motion

A motion to strike or tax costs for the enforcement of a judgment must be served on the judgment creditor and filed within 10 days of service of the memorandum of costs on the judgment debtor. (Code Civ. Proc. § 685.070(c).) If the cost memorandum was served by mail, overnight mail, or email, the period is extended as provided in Code of Civil Procedure section 1013. (Code Civ. Proc. § 685.070(f).) Judgment Debtor challenges the service of the memorandum of costs. However, even if the memorandum was properly served, Judgment Debtor’s motion is timely. Judgment Creditors served the memorandum of costs by mail on March 3, 2023. (Memorandum of Costs Proof of Service.) Ten days plus five additional days for mail service court days places the deadline for this motion on March 18, 2023, a Saturday. Accordingly, the deadline to file this motion was extended to March 20, 2023, the date this motion was filed and served. (Code Civ. Proc. § 12.) Thus, as stated, the motion is timely, notwithstanding the issue of service of the memorandum of costs.

Judgment Creditors argue in their opposition that this motion was not properly served because it was served on Judgment Creditors’ attorney of record, rather than Judgment Creditors directly. Judgment Creditors are mistaken. Code of Civil Procedure section 684.010 expressly requires that any motion to tax costs under the Enforcement of Judgments Law (Code Civ. Proc. §§ 680.010 et seq.) be served on the Judgment Creditor’s attorney of record and not the Judgment Creditor. (Code Civ. Proc. § 684.010.)

Validity of Memorandum

Judgment Debtor challenges the validity of the Memorandum of Costs in its entirety on the grounds that it was not served on Judgment Debtor personally before full satisfaction of the Judgment.

Code of Civil Procedure section 685.070(b) states:

Before the judgment is fully satisfied but not later than two years after the costs have been incurred, the judgment creditor claiming costs under this section shall file a memorandum of costs with the court clerk and serve a copy on the judgment debtor. Service shall be made personally or by mail. The memorandum of costs shall be executed under oath by a person who has knowledge of the facts and shall state that to the person’s best knowledge and belief the costs are correct, are reasonable and necessary, and have not been satisfied.

(Code Civ. Proc. § 685.070(b).) The amount required to satisfy a money judgment is the total amount of the judgment, plus costs added after judgment (including attorney’s fees) plus accrued interest on the judgment, less payments and any amounts no longer enforceable. (Code Civ. Proc. § 695.210.)

The following facts are undisputed: On January 13, 2023, after four years of extensive litigation and appeals, this Court entered final judgment in this matter in favor of Respondents and against Family 3 in the total amount of $6,777,904.11, representing a principal sum of $6,550,000.00 plus $227,904.11 in prejudgment interest. (Final Judgment ¶ 4.) Additional appeals and motions followed, until the parties reached an agreement before the Court on February 3, 2023 concerning the enforcement of the judgment. In the February 3, 2023 hearing, the parties stipulated as follows:

Petitioner Ann Simons will wire $2.5 million to Respondent's lawyer's trust fund at or before 5:00 p.m. on February 6, 2023. If received by that time and date, all efforts by Judgment Creditors to enforce the Judgment against any party named in the Judgment shall be stayed.

Petitioner Ann Simons will have until 5:00 p.m. on March 10, 2023 to pay the remainder owed under the Judgment, plus accrued interest. The parties agreed to make efforts to stipulate to additional fees and costs owed to Judgement Creditors so Petitioner Ann Simons can fully satisfy what is or will be owned under the Judgment in this case.

The abstracts of judgment, creditor’s liens, and writs of execution previously issued and/or served in this case shall remain in place but Judgment Creditors agree not to take further enforcement actions based on Petitioner’s promises to pay off the outstanding debt in the Judgment.

In addition, Petitioner Ann Simons agrees that she will not transfer or dispose of any bank accounts, stock accounts or other liquid assets until she has satisfied the Judgment pursuant to this stipulated order, except to use assets to pay expenses, cover debts and make other payments that are in the ordinary course of business.

Attorney Gerald L. Sauer (for petitioner Ann Simons); Attorney Beth Ann Young (for Judgment Creditors) and Attorney Christopher Pitet (for Interested Parties Jordan Simmons and Jennifer Simons-Luchs) all orally accept the terms of the above referenced settlement agreement in open court this date.

(February 3, 2023 Minute Order.) Judgment Creditors filed a Notice of Receipt of Payment confirming that Judgment Debtor made the partial payment of the judgment of $2,500,000 on February 6, 2023, as ordered. (February 7, 2023 Notice of Receipt of Payment.) Judgment Creditors then filed an Acknowledgement of Satisfaction of Judgment on March 13, 2023, stating that Judgment Debtor paid an additional $4,576,280.80, allegedly in partial satisfaction of the Judgment. (March 13, 2023 Acknowledgement of Satisfaction of Judgment.) According to Judgment Debtor, the amount paid included an overpayment of $217,608.50 that was intended to account for additional interest and outstanding prejudgment fees and costs. (Declaration of Gerald L. Sauer ISO Mot. Exh. I.)

Judgment Debtor argues that the judgment was fully satisfied by the second payment, and that the Memorandum of Costs is untimely and invalid under Code of Civil Procedure section 685.070(b) because it was not directly served on Judgment Debtor, rather than her counsel of record, as required by the Enforcement of Judgments Law. (Code Civ. Proc. § 684.020.)

In opposition, Judgment Creditors argue, first, that the judgment was not fully satisfied because the Memorandum of Costs was filed prior to the delivery of the second payment, which they concede was made on March 8, 2023, so the additional costs and fees sought became part of the Judgment that had to be satisfied. Judgment Creditors are mistaken. Code of Civil Procedure section 685.090 states, in relevant part:

Costs are added to and become a part of the judgment:

. . .

(2) If a memorandum of costs is filed pursuant to Section 685.070 and no motion to tax is made, upon the expiration of the time for making the motion.

(Code Civ. Proc. § 685.090.) Here, as stated above, the Motion to Tax Costs was timely filed. Judgment Creditors’ reliance on Lucky United Properties Investment Inc. v. Lee (2010) 185 Cal.App.4th 125, is misplaced, as the Court of Appeal’s conclusion in that case that the costs were integrated into the judgment was based on the application of section 685.090. (Lucky United Properties Investment Inc. v. Lee (2010) 185 Cal.App.4th 125, 144.) Here, Judgment Debtor has timely moved to tax the memorandum of costs. Accordingly, the memorandum of costs has not yet been incorporated into the judgment, and Judgment Debtor’s March 8, 2023 payment has more than satisfied the amount of the existing judgment.

Judgment Creditors next argue that service of the Memorandum of Costs was properly made because the parties “elected to go a different and more efficient route by entering into the Settlement on February 3 to resolve not only (i) the timing of Simons’s payment of the original Judgment principal amount with interest, but also (ii) the method by which the parties would resolve the remaining issue of post-judgment fees and costs.” (Opposition p.12:29-31.) Judgment Creditors argue that, because of the agreement between the parties and the course of conduct concerning payment of the judgment thus far, service on Judgment Debtor’s counsel of record was sufficient. The Code of Civil Procedure says otherwise. Code of Civil Procedure section 684.020 expressly controls the manner of service of post-judgment papers on a judgment debtor:

(a) Except as provided in subdivision (b), when a writ, notice, order, or other paper is required to be served under this title on the judgment debtor, it shall be served on the judgment debtor instead of the attorney for the judgment debtor.

(b) The writ, notice, order, or other paper shall be served on the attorney specified by the judgment debtor rather than on the judgment debtor if all of the following requirements are satisfied:

(1) The judgment debtor has filed with the court and served on the judgment creditor a request that service on the judgment debtor under this title be made by serving the attorney specified in the request. Service on the judgment creditor of the request shall be made personally or by mail. The request shall include a consent, signed by the attorney, to receive service under this title on behalf of the judgment debtor.

(2) The request has not been revoked by the judgment debtor.

(3) The consent to receive service has not been revoked by the attorney.

(c) A request or consent under subdivision (b) may be revoked by filing with the court a notice revoking the request or consent. A copy of the notice revoking the request or consent shall be served on the judgment creditor. Service shall be made personally or by mail. The judgment creditor is not bound by the revocation until the judgment creditor has received a copy of the notice revoking the request or consent.

(Code Civ. Proc. § 684.020.) No request that service upon the Judgment Debtor be made to her counsel of record has ever been filed with the Court, as required by subdivision (b). As Judgment Creditors concede that service was never made on Judgment Debtor directly before March 8, 2023, Judgment Creditors did not serve the Memorandum of Costs on the Judgment Debtor before full satisfaction of the judgment was made. The Memorandum of Costs is therefore improper and must be stricken in its entirety.

CONCLUSION:

Accordingly, Petitioner’s Motion to Strike or Tax the Memorandum of Costs is GRANTED.

Moving Party to give notice.

IT IS SO ORDERED.

Dated: April 25, 2023 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.