Judge Theresa M. Traber, Case Number: BC605281, Date: 2024-08-02 Tentative Ruling

Judge: Theresa M. Traber, Case: BC605281, Date: 2024-08-02 Tentative Ruling

Case Number: BC605281 Hearing Date: August 2, 2024 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: August 2, 2024 JUDGMENT: April 23, 2024

CASE: Albert Barrios, et al. v. Joel Leebove, et al.

CASE NO.: BC605281

MOTION TO TAX COSTS

MOVING PARTY: Plaintiff Albert Barrios, an individual, on behalf of other stakeholders, and derivatively on behalf of 123 Los Robles, LLC

RESPONDING PARTY(S): Defendant Patrick Chraghchian

CASE HISTORY:

12/23/15: Complaint filed.
07/08/16: First Amended Complaint filed.
09/01/16: Second Amended Complaint filed.
02/06/23: Judgment entered for Defendants.
04/23/24: Amended Judgment entered for Defendants.

STATEMENT OF FACTS

Plaintiff alleged that Defendants breached their fiduciary duties to a limited liability company by giving an easement to an entity Defendants owned which benefited Defendants.

Plaintiff moves to tax trial costs and costs on appeal assessed against him in his individual capacity claimed by Defendant Chragchian.

TENTATIVE RULING:

Plaintiff’s Motion to Tax Costs is DENIED.

DISCUSSION:

Plaintiff moves to tax trial costs and costs on appeal assessed against him in his individual capacity claimed by Defendant Chragchian.

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 they meet 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.)

Defendants’ Late Opposition

Plaintiff objects to late service of the opposition. Defendant filed and served his Opposition to this motion by email on July 23, 2024, 8 court days before the date the motion was scheduled to be heard. Any opposition must be served nine court days before the date of the hearing, plus two court days if served electronically. (Code Civ. Proc. §§ 1005(b); 1010.6.) The opposition was therefore not timely served. However, as Plaintiff was able to file and serve a reply brief, the Court finds that this defect in service is not prejudicial.

Request for Judicial Notice

Plaintiff requests that the Court take judicial notice of the Court’s May 18, 2016 order denying Defendants’ motion to require Plaintiff to furnish an undertaking in support of a derivative action. Plaintiff’s request is GRANTED pursuant to Evidence Code section 452(d) (court records).

Challenge to Trial Costs

“Any notice of motion to strike or to tax costs must be served and filed 15 days after service of the cost memorandum. If the cost memorandum was served by mail or email, the period is extended as provided in Code of Civil Procedure section 1013.” (Cal. Rules of Court, rule 3.1700(b)(1).) Plaintiff offers no explanation of how his motion is timely with respect to trial costs where (1) the Memorandum of Costs for trial was served on February 16, 2023; (2) Plaintiff previously moved to tax those costs; and (3) the Court ruled on that motion on June 30, 2023, granting that motion in part and denying it in part. (See June 30, 2023 Minute Order.) Plaintiff’s assertion that he was “denied due process” when the Amended Judgment was entered awarding those costs is without merit: Plaintiff litigated the proper award of costs and secured a partial reduction of the cost award and objected to the proposed Amended Judgment applying that award. Those objections were overruled in their entirety. (April 23, 2024 Minute Order.) Plaintiff is not entitled to relitigate the Court’s ruling except by way of a renewed motion pursuant to Code of Civil Procedure section 1008(b), with which Plaintiff makes no effort to comply. These procedural violations are more than sufficient for the Court to reject Plaintiff’s challenge to the trial costs. Moreover, for the reasons stated below, Plaintiff’s challenge to both trial and appellate costs is without substantive merit.

Timeliness of Challenge to Appellate Costs.

Challenge to Appellate Costs

Plaintiff contends that Defendant is not entitled to costs on appeal because, according to Plaintiff, Corporations Code section 17709.02 is the exclusive basis for an award of litigation expenses, including costs, in a derivative action. Subdivision (b) of that statute authorizes a defendant in a derivative action to move for an order requiring the plaintiff to furnish security up to $50,000 for reasonable expenses incurred in connection with the action. (Corp. Code § 17709.02(b.) However, as Defendant states in opposition, the weight of authority is contrary to Plaintiff’s position. For example, in Brusso v. Running Springs Country Club, Inc. (1991) 228 Cal.App.3d 92, the Court of Appeal rejected the argument that the identical language in Corporations Code section 800 displaced the right to recover fees under Civil Code section 1717. (Brusso v. Running Springs Country Club, Inc. (1991) 228 Cal.App.3d 92, 102.) Plaintiff’s contention that Brusso was concerned with an agreement that contained a fees and costs provision is immaterial: the holding of Brusso is that Corporations Code section 800 is not an exclusive remedy. As Corporations Code section 17709.02 contains identical language, that holding is equally applicable here.

More directly, West Hill Farms Inc. v. RCO Ag Credit Inc., which Plaintiff cites, expressly states that while section 800 does not provide a basis for a prevailing defendant to recover attorney’s fees and costs in excess of the $50,000 limit, it does not limit liability for fees and costs that are independently recoverable under a contract or another statute. (West Hill Farms Inc. v. RCO Ag Credit Inc. (2009) 170 Cal.App.4th 710, 713 fn.3.) Freeman v. Goldberg, on which Plaintiff principally relies, is inapposite, because our Supreme Court was only confronted there with the issue of whether a defendant could recover attorney’s fees where a bond was ordered, the plaintiff failed to post the bond, and the action was dismissed on that ground. (Freeman v. Goldberg (1961) 55 Cal.2d 622, 626.) Here, in contrast, no bond was ordered, and Defendant ultimately prevailed at trial, thus entitling him to costs under Code of Civil Procedure section 1032(a), and on appeal, thus entitling him to costs on appeal under Rule of Court 8.891(a)(1) and by express order of the Court of Appeal. (April 19, 2024 Remittitur; see also Cal. Rule of Court 8.891(a)(1); Code Civ. Proc. § 1034(b).)

Plaintiff’s Corporations Code argument is without merit as to both the trial costs and costs on appeal. As Plaintiff offers no other basis for challenging the claimed costs, Plaintiff’s motion must be denied in its entirety.

CONCLUSION:

Accordingly, Plaintiff’s Motion to Tax Costs is DENIED.

Moving party to give notice, unless waived.

IT IS SO ORDERED.

Dated: August 2, 2024 ___________________________________

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.