Judge: Yolanda Orozco, Case: 20STCV27223, Date: 2022-12-07 Tentative Ruling
Case Number: 20STCV27223 Hearing Date: December 7, 2022 Dept: 31
PLAINTIFF’S MOTION TO TAX COSTS IS DENIED;
DEFENDANT’S MOTION TO TAX COSTS IS GRANTED, IN PART
Background
The present action arises out of Daevieon Towns’ purchase of a 2017 Hyundai Elantra (“Subject Vehicle”), on October 21, 2016. Plaintiff Towns and Plaintiff Lashona Johnson (collectively “Plaintiffs”) claim the Subject Vehicle had various electrical and engine defects and non-conformities. Plaintiffs further allege that Hyundai Motor America (“Defendant”) violated the Song-Beverly Consumer Warranty Act by failing to repair the aforementioned defects and failing to repurchase the Subject Vehicle.
On July 20, 2020, Plaintiffs initiated this case. Later, Plaintiffs filed the operative First Amended Complaint which alleges causes of action for (1) Violation of Song-Beverly Consumer Warranty Act—Breach of Express Warranty; (2) Violation of Song-Beverly Consumer Warranty Act—Breach of Implied Warranty; and (3) Violation of Song-Beverly Consumer Warranty Act Section 1793.2 against Defendant and Does 1 to 10.
A Jury Trial was held and on September 01, 2022, a verdict was reached in favor of Plaintiffs. The Jury also awarded Plaintiffs prejudgment interest on the amount of $9,374.92 as of May 30, 2018.
Each party has filed a motion to tax costs.
Legal Standard
A prevailing party in entitled to recover costs, including attorneys’ fees, as a matter of right.¿ (Code Civ. Proc., §§ 1032(a)(4), 1032(b), 1033.5.)¿ In a breach of contract action, attorneys’ fees shall be awarded when a contract provides that one of the parties or the prevailing party shall be awarded attorneys’ fees in an action on that contract.¿ (Civ. Code, §1717.)¿¿
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The fee setting inquiry in California ordinarily begins with the “lodestar” method, i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. A computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award. The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.¿ (Serrano v. Priest (1977) 20 Cal.3d 25, 49.)¿ Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary.¿ (Id. at 48, fn.23.)¿ After the trial court has performed the lodestar calculations, it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the section 1717 award so that it is a reasonable figure.¿ (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095-96.)¿
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The factors considered in determining the modification of the lodestar include the nature and difficulty of the litigation, the amount of money involved, the skill required and employed to handle the case, the attention given, the success or failure, and other circumstances in the case.¿ (EnPalm, LLC v. Teitler Family Trust (2008) 162 Cal. App. 4th 770, 774 (emphasis in original).)¿ A negative modifier was appropriate when duplicative work had been performed.¿ (Thayer v. Wells Fargo Bank, N.A. (2001) 92 Cal.App.4th 819.)¿
Plaintiffs and Defendant disagree on whether Defendant’s 998 Offer should bar Plaintiffs’ costs after the 998 Offer was made.
The Verdict in this Case
Plaintiffs’ damages were awarded as follows:
A Civil Penalty in the amount of $18, 749.84 and restitution damages in the amount of $9,374.92 totaling $28,124.76 in total damages.
The Jury also awarded prejudgment interest on $9,374.92, at 10% per annum for a total prejudgment interest awarded of $4,235.36. The total judgment is $32,360.12.
Defendant’s 998 Offer
Defendant served Plaintiff with a 998 Offer for $33,000.00 on October 06, 2020, with fees and costs to be determined by a separate motion. (Opp. Takahasi Decl. Ex. B [998 Offer], F [Velazquez Decl.].)
The Offer was addressed “TO PLAINTIFF AND HIS ATTORNEY OF RECORD” and stated in the relevant part:
“Pursuant to Code of Civil Procedure Section 998, defendant Hyundai Motor America ("HMA") hereby offers to compromise this action as follows:
1. HMA will pay the total amount of $33,000.00 to Plaintiff.
2. HMA will pay Plaintiff’s attorney's fees, expenses and costs in an amount of $5,000.00, or should $5,000.00 be refused, at Plaintiff’s election, in the amount to be determined by the Court to have been reasonably incurred pursuant to Civil Code Section 1794(d). This is a settlement offer. There is no admission of liability by this offer.”
(Id.)
Defendant now asserts that it is entitled to its post-offer costs because Plaintiffs’ favorable jury verdict was not more than the 998 Offer and therefore Defendant is entitled to fees and costs incurred as of the date the 998 Offer was served on October 06, 2022.
“The basic premise of section 998 is that plaintiffs who reject reasonable settlement offers and then obtain less than the offer should be penalized for continuing the litigation. The harsh result of section 998 is that the plaintiff not only loses the right to recover his or her costs, but must also pay the defendant's post-offer costs.” (Meister v. Regents of University of California (1998) 67 Cal.App.4th 437, 450.) “In a civil action, if a plaintiff rejects a defendant's section 998 offer to compromise and later prevails after trial but fails to obtain a judgment more favorable than the defendant's offer, he or she may recover pre offer costs but the mandatory penalty provisions of subdivision (c) of section 998 prohibit the plaintiff from recovering post offer costs and require that he or she pay the defendant's post offer costs. (Citation.) Under the discretionary penalty provisions of section 998, subdivision (c), the trial court in such a case may in its discretion require the plaintiff to pay not only the defendant's ordinary court costs from the date of filing of the complaint, but also the defendant's expert witness costs.” (Bodell Const. Co. v. Trustees of California State University (1998) 62 Cal.App.4th 1508, 1511 [italics original].)
Moreover, post-offer prejudgment interest awarded to a Plaintiff under Civil Code section 3287 are to be excluded in determining whether the plaintiff obtained a more favorable judgment. (See Bodell Const. Co., supra, 62 Cal.App.4th at 1512.) Plaintiff’s prejudgment interest before October 06, 2022, would be $2,211.45 ($9,374.92 at a rate of 10% per year for 2.358904 years (861 days) is $11,586.37. $11,586.37 minus $9,374.92 equals $2,211.45.) This would bring Plaintiff’s total judgment to $30,336.21.
Whether Plaintiff’s judgment is calculated to be $30,336.2 without post-offer prejudgment interest, or $32,113.40, there is no dispute that Defendant’s 998 Offer of $33,000.00 was the more favorable offer.
Plaintiffs’ Motion to Tax Costs
Plaintiff’s motion to tax costs does not specifically identify which costs it seeks to tax from Defendant’s Memorandum of Costs and reads instead as an opposition brief regarding the mandatory cost-shifting provision of section 998. Plaintiffs argue that they acted reasonably in rejecting the section 998 Offer because it was made on October 06, 2020, shortly after Plaintiff filed his Complaint on July 20, 2020. Therefore, Plaintiff Daevieon Towns did not have sufficient information to know if Defendant’s offer was a reasonable one and a fair estimate of the damages Plaintiff Towns was entitled to. Although discovery had been propounded, Plaintiff Towns did not receive responses and documents until November 27, 2020, the day after the 998 Offer had expired. (Cutler Decl. ¶ 8, Ex. B.)
“Simply put, section 998 ‘penalizes a plaintiff who fails to accept what, in retrospect, is seen to have been a reasonable offer.’” (Mesa Forest Products, Inc. v. St. Paul Mercury Ins. Co. (1999) 73 Cal.App.4th 324, 330, citing Harvard Investment Co. v. Gap Stores, Inc. (1984) 156 Cal.App.3d 704, 713.) Plaintiffs present no facts showing that Defendant’s offer was unreasonable, other than that it was made shortly after Plaintiff Towns filed his Complaint. After the 998 Offer had lapsed and Defendant had served discovery responses, Plaintiff Towns had sufficient time to evaluate the offer and were free to make their own 998 Offer. In fact, Plaintiff Towns did make a 998 Offer for $73,270.35, plus fees, costs, and expenses. (Mot. Takahasi Decl. ¶ 3, Ex. G.) There are no facts showing that this case was particularly novel or complex, or that Defendant’s 998 Offer was vague and uncertain such that Plaintiff Towns could not evaluate the reasonableness of the Offer.
The Offer clearly allowed Plaintiffs’ counsel to seek recovery of pre-998 Offers cost by a separate motion and for the Court to retain jurisdiction to enforce the settlement. (See Opp. Takahasi Decl. Ex. B.) Most of Plaintiffs’ objections to applying the fee-shifting provisions were raised for the first time on reply. (See Balboa Ins. Co. v. Aguirre (1983) 149 Cal. App. 3d 1002, 1010 [“The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before”].) In addition, Plaintiffs failed to specifically object to items in Defendant’s Memorandum of Costs, so the Court is unable to determine what costs Plaintiffs seek to tax even if the Court allowed the motion.
For all the reasons stated, Plaintiff Towns Motion to Tax Costs is DENIED.
Defendant’s Motions to Tax Costs
The Court agrees with Plaintiff that Defendant’s 998 Offer was not binding on Plaintiff Lashona Johnson because Defendant has failed to present evidence that the Offer was addressed or presented to Plaintiff Johnson. The burden is on Defendant to show that the 998 Offer was binding on Plaintiff Lashona Johnson. (See Khosravan v. Chevron Corp. (2021) 66 Cal.App.5th 288, 294 [“On a motion to strike or tax costs, ‘the burden is on the offering party to demonstrate that the offer is valid under section 998.’”].)
At the time Plaintiff Towns filed his Complaint, he and Plaintiff Johnson were married but legally separated. When the 998 offer was sent, Johnson was not yet a Plaintiff in the case. Defendant asserts that Plaintiff Johnson knew about the lawsuit and had spoken to Defendant about the repurchase. But there is no evidence that Plaintiff Johnson knew about the offer 998 Offer or even that Defendant had extended the 998 Offer to Plaintiff Johnson. There is also no evidence that Johnson had an opportunity to evaluate the Offer. By the time the First Amended Complaint was filed and Plaintiff Johnson was added as a Plaintiff, Defendant’s 998 Offer had already lapsed. Defendant does not dispute these facts.
Defendant cites Holmes v. David H. Bricker, Inc. (1969) for the proposition that because Plaintiffs’ Song-Beverly cause of action cannot be split, a 998 Offer on Plaintiff Towns would be binding on Plaintiff Johnson. (Holmes v. David H. Bricker, Inc. (1969) 70 Cal.2d 786, 790.) The Court disagrees. Holmes does not stand for the proposition that a 998 Offer made to one Plaintiff is binding on Plaintiffs that are subsequently added to the action based on the same cause of action. Holmes stands for the proposition that causes of action cannot be split if premised on the same breach, but if a single act causes damage to property and injury to person, then separate causes of action may be pursued (Holmes, supra, 70 Cal.2d at 790 [“Under these circumstances the applicable rule is that all damages for a single breach of contract must be recovered in one action.”].)
“In interpreting section 998 ... the offering party has the burden of demonstrating that the offer is a valid one under section 998. The corollary to this rule is that a section 998 offer must be strictly construed in favor of the party sought to be subjected to its operation.” (Timed Out LLC v. 13359 Corp. (2018) 21 Cal.App.5th 933, 942 [internal citations and quotations omitted].)
Defendant has not met its burden to show that the 998 Offer was binding on Plaintiff Johnson.
Accordingly, the Court will strike post-offer costs as to Plaintiff Towns but not Plaintiff Johnson provided that Defendant specifically objects to the costs.
Defendant’s Motion to Tax Costs includes a chronological chart of Plaintiff’s costs and labeled certain costs as unnecessary and a brief description of why the costs were unnecessary. “A verified memorandum of costs is prima facie evidence of the propriety of the items listed on it, and the burden is on the party challenging these costs to demonstrate that they were not reasonable or necessary. (Bender¿v. County of Los Angeles (2013) 217 Cal.App.4th 968, 989.¿“A party’s mere statements in the points and authorities accompanying its notice of motion to strike cost bill and the declaration of counsel are insufficient to rebut the prima facie showing that the costs were necessarily incurred.” (Jones¿v. Dumrichob (1998) 63 Cal.App.4th 1258, 1266.) Therefore, costs not specifically objected to by Defendant in its motion or addressed by Plaintiff in its opposition to Defendant’s motion will not be addressed by the Court.
Item 5 in Plaintiff’s Memorandum of Costs – Process Service Fees
Defendant objects to the deposition notices served on all South Bay Hyundai personnel because only one PMQ deposition was allowed under the Case Management Order (CMO). Moreover, Defendant asserts that the CMO requires that the parties meet and confer prior to serving additional deposition notices, which Plaintiffs’ counsel did not do. (Takahashi Decl. ¶ 10.)
Because Defendant has properly objected to the service of process fees for South Bay Hyundai personnel, the burden is on the Plaintiffs to show that the costs are reasonable and necessary. (See Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-774.)¿
Plaintiffs argue that the deposition subpoenas on dealership personnel were necessary to ensure testimony to lay the foundation for the sales contract, repair orders, and their testimony regarding knowledge of communications with Plaintiffs and repairs performed on the subject vehicle. (Cutler Decl. ¶ 6.) The witnesses were nonparties, and each needed to be served with his own subpoena and some of the individuals needed to be served for trial (Id.) Plaintiffs assert the subpoenas are not duplicative and are itemized. (Id. Ex. A.)
However, Plaintiff does not dispute Defendant’s assertion that there were no meet and confer prior to serving the deposition notices. Plaintiffs state only “it is Plaintiffs’ experience that the manufacturer defendant will refuse to stipulate to the authenticity of these business records thus to be adequately prepared for trial and introducing these key exhibits, Plaintiff must subpoena these witnesses.” (Cutler Decl. ¶ 6.) Had Plaintiffs tried to comply with the CMO by meeting and conferring, Plaintiffs could have been able to show that depositions notice costs were necessarily incurred because Defendant had refused to stipulate to the authenticity of the business records, including sales contract and repair orders.
The Court agrees with Defendant and $65.25 will be subtracted for each service of process fee for the nine South Bay technicians served on November 23, 2022, totaling $587.25. Another $70.25 will be subtracted for each of the seven South Bay personnel served on April 05, 2022, totaling $526.75.
Thus, $1,114.00 will be taxed from Item 5 because Plaintiffs cannot show that those costs were reasonably incurred and necessary to the litigation due to their failure to meet and confer with Defendant prior to serving the additional deposition notices.
Item 13 in Plaintiff’s Memorandum of Costs: Other Costs
Defendant objects to $5,806.95 in travel costs because Defendant asserts the costs were for local travel.
Plaintiffs assert that travel costs are not specifically enumerated nor prohibited by the Code of Civil Procedure. (See Code Civ. Proc. §§ 1033.5 subds. (a), (b).) Scot Wilson and senior trial paralegal both live in Orange County, so it was reasonable for them to get a hotel near the courthouse. (Cutler Decl. ¶ 7.) The other charges include parking, meals, and mileage.
Although travel by Plaintiff’s counsel and the paralegal are arguably reasonably necessary to the conduct of the litigation, meals are not. “Nor can meal expenses be justified as ‘necessary to the conduct of the litigation’ since attorneys have to eat, whether they are conducting litigation or not. At best, these expenses are ‘merely convenient or beneficial’ to preparation for litigation, the recovery of which is proscribed under section 1033.5, subdivision (c). They should have been stricken.” (Ladas, supra, 19 Cal.App.4th at 774–775.)
The Declaration of Jacob Cutler’s Exhibit A shows that meals for S. Wilson amount to $536.80. Meals for S. Smara amount to $72.47. Meals for D. Folia cost $94.80, and a $10.00 tip for Valet is included. The total meals cost is $749.36 and this amount will be taxed.
Defendant also opposes the parking, meals, and mileage for Kevin Chaffin who did not assist in the trial but sat in the back of the courtroom the whole time. The Court agrees. Accordingly, the Court will tax $603.94 in costs associated with Mr. Chaffin since his participation at trial was not reasonably necessary to the conduct of the litigation. In total, $1,353.30 will be taxed from Item 13.
Therefore, Defendant’s Motion to Tax Costs is GRANTED, IN PART.
Plaintiffs’ Attorney’s Fees for Opposing Defendant’s Motion
Plaintiffs’ request $2,925.00 in attorney’s fees for 6.5 hours of work incurred at $450 per hour for opposing Defendant’s motion given that Defendant failed to meet and confer prior to filing this motion. (Cutler Decl. ¶ 9.)
Since Plaintiff Johnson remains a prevailing party and the 998 Offer was not binding on her, she can recover post-offer costs for the need to oppose this motion. However, the amount requested is excessive. The Court awards $900.00 to Plaintiffs for 2.0 hours of work.
Conclusion
Plaintiffs’ Motion to Tax Costs is DENIED.
Defendant’s Motion to Tax Costs is GRANTED, IN PART and $2,467.30 will be taxed from Plaintiff’s Memorandum of Costs.
The Court awards Plaintiffs $900.00 in attorney’s fees for opposing Defendant’s Motion to Tax Costs.