Judge Yolanda Orozco, Case 20STCV11372 2022-08-23 Tentative Ruling

Judge: Yolanda Orozco, Case: 20STCV11372, Date: 2022-08-23 Tentative Ruling

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Case Number: 20STCV11372 Hearing Date: August 23, 2022 Dept: 31

DEFENDANT’S MOTION TO TAX COSTS IS DENIED

Background

On March 19, 2022, Plaintiffs Naima Smith, Daunteyvia Dates, Douglas Johnson, Chrysalin Byrd, Cesar Rodriguez, Martell Wynder, and Anthony Walker filed a Complaint against Defendants Abode Communities, LLC, Abode Communities, 44000 Sahuayo Street, L.P., Vista del Mar MGP, LLC, and Vista del Mar AGP, LLC for violation of the California Investigative Consumer Reporting Agencies Act (ICRAA).

A Jury Verdict in favor of the Plaintiffs was signed and filed on June 27, 2022. (Min. Or. 06/27/22.)

On July 15, 2022, Defendant Abode moved to Tax Costs.

Plaintiffs filed opposition papers on August 10, 2022. Defendant Abode filed a reply on August 12, 2022.

Legal Standard

A prevailing party in litigation may recover costs, including but not limited to filing fees. (Code Civ. Proc., §1033.5(a)(1). Under Code of Civil Procedure section 1033.5(c)(2), allowable costs are only recoverable if they are “reasonably necessary to the conduct of the litigation.” Even mandatory costs, when incurred unnecessarily, are subject to section 1033(c)(2). (Perko’s Enterprises, Inc. v. RRNS Enterprises (1992) 4 Cal.App.4th 238, 245.) Section 1033.5(c)(4) provides that “[i]tems 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(c)(4).)

Under California Rules of Court Rule 3.1700, a party may file and serve a motion to tax costs listed in a memorandum of costs. Under Rule 3.1700(b)(1), “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, the period is extended as provided in Code of Civil Procedure section 1013. If the cost memorandum was served electronically, the period is extended as provided in Code of Civil Procedure section 1010.6(a)(4).”

A verified memorandum of costs is prima facie evidence that the costs, expenses, and services therein listed were necessarily incurred. (Rappenecker v. Sea-Land Serv., Inc. (1979) 93 Cal.App.3d 256, 266.) A party seeking to tax costs must provide evidence to rebut this prima facie showing. (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1266.) Mere statements unsupported by facts are insufficient to rebut the prima facie showing that costs were necessarily incurred. (Id.)

Discussion

Defendant Abode argues that $4,525.46 in Plaintiffs’ costs were unnecessarily incurred because Defendant’s 998 Offer was more favorable than the May 5, 2022, Jury Verdict. Therefore, under Code Civ. Proc. Section 998(c)(1), Plaintiffs post-offer costs are not recoverable. (See Lafayette v. County of Los Angeles (1984) 162 Cal.App.3d 547, 557, 208 Cal.Rptr. 668.)

i. 998 Offer was Properly Served

First, Plaintiffs claim the 998 Offers were not properly served because Defendant failed to confirm by telephone or email the electronic service address for Plaintiffs’ counsel being served.

Defendant argues this was unnecessary because Plaintiffs’ counsel used the same email to communicate with Defendant, including transmitting and receiving pleadings related to the case. Defendants assert that Plaintiff even requested documents be served to him via the same email to which the 988 Offers were sent, and Plaintiff’s counsel has even confirmed receiving the documents. (Reply Ex. B, C.) Plaintiff’s counsel never communicated to the defense that he did not receive emails at the email provided.

Plaintiffs cite no other facts or case law, to support their contention that the 988 Offers were improperly served. Accordingly, the Court finds the 998 Offers were properly served.

ii. Plaintiffs failed to Obtain a More Favorable Judgment

On May 5, 2022, the Jury verdict awarded each of the five Plaintiffs $10,000.00 for violations of Investigative Consumer Reporting Agencies Act (ICRAA). The Court entered non-suit as to two other Plaintiffs who did not appear and did not present evidence.

Defendant asserts that the 998 Offers of $10,100.00 for each Plaintiff was more favorable than the Jury verdict because it was “exclusive of attorney fees and costs.” (Mot. Ex. A) The Offers would have allowed allow Plaintiffs to file a separate motion to recover attorney’s fees and costs. Plaintiffs assert that Defendant’s 998 Offer for $10,100.00 was not more favorable than the jury verdict because it did not account for attorney’s fees. At the time of the 998 Offer was made on November 18, 2021, Plaintiffs had incurred over $50,000.00 in attorney’s fees. (Murphy Decl. ¶ 4.)

Under ICRAA, Plaintiffs were entitled to recover:

“(1) Any actual damages sustained by the consumer as a result of the failure or, except in the case of class actions, ten thousand dollars ($10,000), whichever sum is greater.

(2) In the case of any successful action to enforce any liability under this chapter, the costs of the action together with reasonable attorney’s fees as determined by the court.”

(Civ. Code, § 1786.50 subd. (a).)

The incongruency in the 998 Offers is as to whether Plaintiffs’ can recover attorney’s fees under ICRAA if the Offer was silent on liability.

Plaintiffs cite Doran v. North State Grocery, Inc. (2006) in support of the proposition that attorney’s fees are only recoverable under ICRAA if Plaintiffs are the prevailing party. (Doran v. North State Grocery, Inc. (2006) 137 Cal.App.4th 484.) In Dornan, the Appeal Court found that a plaintiff who entered into a compromise settlement under Section 998, could not recover attorney fees under section 52 of the Unruh Civil Rights act because section 52 required a specific finding of liability. (Id. at 491.) The Appeal Court specifically found that “it is well established that a compromise settlement entered into under Code of Civil Procedure section 998 does not constitute an adjudication of liability.” (Id.)

The Appeal Court in Doran further explained that although a prevailing party is allowed to recover attorney’s fees under Code Civ. Proc. section 1033.5, subdivision (a)(10) specifies that attorney fees are only recoverable if authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5 subd. (a)(10).) Since section 52 of the Unruh Act only allowed for attorney’s fees on a finding of liability, the plaintiff in Doran was precluded from recovering attorney’s fees. (Doran, supra, 137 Cal.App.4h at 490.)

Here, Plaintiffs argue that under ICCRA, attorney’s fees are only recoverable “[i]n the case of any successful action to enforce any liability;” hence, since Defendant’s 998 Offers were silent as to liability, Plaintiffs would have been precluded from recovering attorney’s fees if they had accepted Defendant’s Offers under ICCRA. (Citing Civ. Code, § 1786.50 subd. (a)(2).) Defendant does not address this specific issue in their moving papers.

Plaintiffs argue that the Defendant’s 998 Offers lacked good faith since the Offers were silent as to liability and did not offer to pay Plaintiffs’ attorney’s fees and costs. “[W]hether a section 998 offer was reasonable and made in good faith is a matter left to the sound discretion of the trial court.” (Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 700.)

The Court does not have sufficient facts to determine if the Defendant made an offer in bad faith by not offering to cover Plaintiffs’ attorney’s fees because it knew Plaintiffs might be barred from recovering attorney’s fees under ICCRA. Moreover, there is no evidence showing that Plaintiffs communicated to Defendant their reasons for rejecting the Offers; that is, the reason being that due to Defendant’s silence on the issue of liability for violating ICCRA, Plaintiffs could be barred from recovering attorney’s fees in a separate motion.

Therefore, the facts support the finding that Defendant’s 998 Offers were ambiguous. “An offer to compromise under section 998 must be sufficiently specific to allow the recipient to evaluate the worth of the offer and make a reasoned decision whether to accept the offer.” (Khosravan v. Chevron Corp. (2021) 66 Cal.App.5th 288, 295 [internal citations omitted].) The Court finds the 998 Offers lacked specificity regarding Defendant’s liability, such that Plaintiffs may be barred from recovering attorney’s fees under ICCRA. Because a 998 offer must be “strictly construed in favor of the party to be bound by it,” the facts support the finding the 998 Offers were ambiguous such that Plaintiffs could not reasonably assess their worth. (Id. at 295.)

“Where a defendant's settlement offer contains terms that make it ‘exceedingly difficult or impossible to determine the value of the offer to the plaintiff[,] ... a court should not undertake extraordinary efforts to attempt to determine whether the judgment is more favorable to the plaintiff. Instead, the court should conclude that the offer is not sufficiently specific or certain to determine its value and deny cost shifting under Code of Civil Procedure section 998.’”

(Id. citing Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 766.)

Accordingly, the Court finds that the section 998 Offers were not valid as they were not sufficiently specific or certain to determine their value, and Plaintiffs can recover costs and attorney’s fees as the prevailing party. Therefore, the Court declines to cut costs incurred by Plaintiffs after the 998 Offers were made.

Defendant also argues that it should not pay for costs associated with service of process for any of the other Defendants because Plaintiffs agreed to dismiss the other Defendants in exchange for their agreement to waive “any and all” fees and costs. (Mot. Ex C.) Plaintiffs point out that the agreement was between Plaintiffs and the other Defendants, and Plaintiff never agreed to not seek those costs from Defendant Abode. (Murphy Decl. ¶ 5.) Moreover, Plaintiffs assert the costs were necessary to the prosecution of the case because Defendant Abode refused to identify the entity that managed Plaintiffs’ apartment complexes and obtained the reports in violation of ICCRA. (Id.)

The Court agrees with Plaintiff and DENIES Defendant’s request to Tax Cost.

Conclusion

Defendant Abode Communities’ Motion to Tax Costs in the amount of $4,535.46 is DENIED.

Defendant to give notice.

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