Judge: Yolanda Orozco, Case: 20STCV27223, Date: 2023-01-26 Tentative Ruling
Case Number: 20STCV27223 Hearing Date: January 26, 2023 Dept: 31
DEFENDANT’S MOTION TO TAX COSTS
TENTATIVE RULING
Defendant’s Motion to Tax
Costs is GRANTED AND DENIED IN PART; $2,467.30 will be taxed from Plaintiff’s Memorandum
of Costs.
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 contained 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.
The operative First Amended Complaint alleged 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 on September 01, 2022, and a verdict was reached in favor of Plaintiffs.
The Judgment awarded Plaintiffs $28,124.76 in damages and $4,325.36 in prejudgment interest, for a total judgment amount of $32,360.12.
On December 06, 2022, the
Court continued the hearing on Defendant’s Motion to Strike Costs so that the
parties could submit supplemental briefs.
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.)¿¿
¿
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.)¿
¿
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.)¿
Discussion
Defendant Hyundai asserts that its October 06, 2020, 998 Offer bars costs incurred by Plaintiffs’ after the 998 Offer was made.
Defendant’s 998 Offer
“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].)
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. (Takahashi Decl. Ex. B [998 Offer].)
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.”
(Takahashi Decl. Ex. B.)
Defendant now asserts that it is entitled to its post-offer costs because the Plaintiffs’ favorable jury verdict in the amount of $32,360.12 did not beat the 998 Offer of $33,000.00. Therefore, Defendant asserts it is entitled to fees and costs incurred as of the date the 998 Offer was served on Plaintiff Towns on October 06, 2020.
At issue is whether Defendant’s 998 Offer is binding on Plaintiff Lashonda Johnson who was not a named Plaintiff at the time the 998 Offer was made and lapsed.
The burden is on Defendant to show that the 998 Offer was binding on Plaintiff 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.’”].)
Defendant fails to cite any legal authority showing that the 998 Offer is binding on Plaintiff Johnson by the mere fact that she should have known about the 998 Offer through Towns or otherwise.
Defendant offers Johnson’s deposition testimony to show that she took the initiative in contacting a lawyer regarding the subject vehicle. (Supp. Takahashi Decl. ¶ 2, Ex. H [Johnson Depo. 162:16-163:1].) Plaintiff Towns’ deposition testimony confirms that he was living in Las Vegas at the time Johnson decided to hire an attorney and he was not aware that the lawsuit had been filed in July 2020. (Supp. Takahashi Decl. ¶ 3, Ex. I [Towns Depo. 76:8-77:9].)
First, there is no evidence that Knight Law Group, LLP presented the 998 Offer to Plaintiff Johnson at the time the offer was made and before she was added as Plaintiff. Even if Knight Law Group was professionally obligated to present the 998 Offer to Johnson, who was not yet a named party in the case, this fact alone does not make the offer binding on Johnson. Knight Law Group’s alleged failure or obligation to present the 998 Offer to Johnson may be problematic for the Knight Law Group, but the obligation to communicate the settlement offer does not mean the 998 Offer was communicated and is binding on Plaintiff Johnson. (See Matter of Isola (Cal. Bar Ct., May 25, 2022, No. SBC-20-O-30310) 2022 WL 17340777, at *17.)
Second, Defendants fail to show that Plaintiff Towns and Plaintiff Johnson were in privity at the time the offer was made because Plaintiffs allege they were legally separated at the time the lawsuit was filed and the 998 Offer was made. (See Opp. at 8:4-5.)
Defendant cites Holmes v. David H. Bricker, Inc. (1969) for the proposition that because Plaintiffs’ Song-Beverly cause of action could not be split, a 998 Offer would be binding on both parties such that the 998 Offer to Plaintiff Towns should be interpreted as also binding Plaintiff Johnson. (Holmes v. David H. Bricker, Inc. (1969) 70 Cal.2d 786, 790.)
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 caused damage to property and injury to person, then separate causes of action may be stated. (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.”].) Merely, because the Plaintiffs cannot split their Song-Beverly claim, does not compel the conclusion that a 988 Offer which was validly served on one Plaintiff is also valid on a subsequently added Plaintiff.
Family Code section 910 states:
“(a) Except as otherwise expressly
provided by statute, the community estate is liable for a debt incurred by
either spouse before or during marriage, regardless of which spouse has
the management and control of the property and regardless of whether one or
both spouses are parties to the debt or to a judgment for the debt.
(b) ‘During marriage’ for purposes of this section does not include the period after the date of separation, as defined in Section 70, and before a judgment of dissolution of marriage or legal separation of the parties.”
(Id. [italics added].)
It is undisputed that Defendant’s 998 Offer was specifically addressed to Plaintiff Towns, and it offered Plaintiff Towns $33,000.00 as a settlement rather than an offer to pay off the remaining loan balance on the car. Accordingly, the fact that the loan for the Subject Vehicle may have been community debt, does not necessarily dictate that the 998 Offer was communicated to Plaintiff Johnson or that it was binding on her when the offer was made. Moreover, the record before the Court is incomplete regarding whether the subject vehicle and the subsequent judgment are separate or community property.
Family Code section 771, subdivision (a), states:
“The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, after the date of separation of the spouses, are the separate property of the spouse.”
(Id. [italics added].)
“[T]he date of separation can be of considerable consequence with regard to the parties' property rights.” (In re Marriage of Manfer (2006) 144 Cal.App.4th 925, 929.) Section 70 defines the date of separation as occurring when “[t]he spouse has expressed to the other spouse the intent to end the marriage” and “[t]he conduct of the spouse is consistent with the intent to end the marriage.” (Fam. Code, § 70.)
Here, Defendants have failed to show that Plaintiff Towns and Johnsons were in privity when the October 06, 2020 998 Offer was made. Since the Plaintiffs were legally separated, Plaintiff Towns did not have an obligation to communicate the offer to Plaintiff Johnson. Even if the 998 Offer was communicated to Johnson, Defendants cannot show she was bound by the offer at the time it was made. Furthermore, Defendants cannot show that the 998 Offer was intended to extend to Plaintiff Johnson at the time it was made.
Although the Court agrees that the Judgment binds both Plaintiffs and prevents them from litigating the same issue in a subsequent suit, this does not mean that there is “privity” for purposes of collateral estoppel.
“Privity refers to a relationship between the party to be estopped and the unsuccessful party in the prior litigation which is ‘sufficiently close’ so as to justify applying collateral estoppel. (Citation.) Under California law, spouses are in privity with each other where the cause of action in the prior litigation was ‘community in nature’ and the ‘proceeds of any judgment that might have been recovered ... would have belonged to both husband and wife, as community property.’”
(Mueller v. J. C. Penney Co. (1985) 173 Cal.App.3d 713, 723.)
In order for Mueller to be applicable, there needs to be a subsequent lawsuit on a similar issue as this instant action.
“It is thus apparent that plaintiff was in privity
with her husband, i.e., had a mutual relationship to the same right or
property, in the prior litigation. The right, or cause of action,
involved in such prior litigation was community in nature and the proceeds of
any judgment would have been recovered from defendant would have belonged to
both husband and wife, as community property.”
(Zaragosa v. Craven (1949) 33 Cal.2d 315, 321 [italics added].)
Muller holds that privity exists between the Plaintiffs in a subsequent lawsuit, but it does not stand for the proposition that privity existed between the Plaintiffs in this current action. More importantly, what distinguishes this instant case from Mueller and Zaragosa is that the Plaintiffs were legally separated at the time the 998 Offer was made.
As shown by Defendant’s citation to the deposition testimony
of Plaintiff Johnson, as of February 03, 2021, Defendant knew of Johnson’s existence
prior and made the offer only to Plaintiff Towns. Had Defendant intended that
the 998 Offer also apply to Plaintiff Johnson, it should have renewed its 998
Offer and extended it to Johnson when she was added as a Plaintiff. “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].)
Based on the foregoing, the Court finds that Defendant has not met its burden to show that the 998 Offer was binding on Plaintiff Johnson at the time it was made.
To the extent that Defendant asserts Plaintiff Johnson
lacked standing as a “buyer” to be added to this action, the argument should
have been raised on demurrer, in a Motion for Summary Judgment/Adjudication or
in Defendant’s Motion for Judgment Not Withstanding the Verdict. The argument
is waived because it was raised for the first time on reply. (Malmstrom v.
Kaiser Aluminum & Chemical Corp. (1986) 187 Cal.App.3d 299,
320 [“Points raised for the first time in a reply brief will not be considered.”])
Defendant’s Motion to Tax Costs
Defendant’s Motion to Tax Costs included 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 this 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 depositions, which the Plaintiffs’ counsel did not. (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 was 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.
Thus $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.
In sum, $1,114.00 will be taxed from Item 5 because the Plaintiffs cannot show that 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 plus a $10.00 tip for Valet.
$35.29 for Meal for D. Folia, S. Wilson, and S. Samra. In total, meals amount to $749.36 in costs.
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. Accordingly, the court agrees to 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, $2,467.30 ($1,114.00 + $1,353.30) will be taxed from Plaintiff’s Memorandum of Costs.
Conclusion
Defendant’s Motion to Tax Costs is GRANTED AND DENIED IN PART and $2,467.30 will be taxed from Plaintiff’s memorandum of costs.
Moving party to give notice.