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1 STEPHANIE J. FINELLI, SBN 173462
Law Office of Stephanie J. Finelli FILE?/^:"^^"^^^^ }1 vi laj* i, J a ^ t ) 1"^ li
2 1007-7th Street, Suite 500
Sacramento, CA 95814
3 tel 916-443-2144 MAR 3 0 2011
fax 916-443-1511
4
Attomey for Plaintiffs, By _D .|nH;-'S'"'l
5
FLORENTINE and RODNEY ABBOTT
6
7 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
8 IN AND FOR THE COUNTY OF SACRAMENTO
9
10 FLORENTINE AND RODNEY ABBOTT, CaseNo.: 07AS04450
II Plaintiffs, REPLY TO OPPOSITION TO MOTION
TO TAX COSTS
12 vs.
13 RONALD BRITSCHGI, et. al.. Trial Date: January 18, 2011
Judgment: February 3, 2011
14 Defendants
Hearing: April 8, 2011
15 Time: 9:30 a.m.
Dept: 43
16 and related cross-actions Judge: Brian Van Camp
17
18 A. Plaintiffs Did not Mischaracterize the Burden of Proof
19 In their Motion to Tax Costs, plaintiffs moved this Court for an order (1) taxing the cost
20 memorandum in its entirety on the basis that defendants are not necessarily the prevailing party;
21 (2) taxing all expert witness fees on the grounds that the section 998 offer was not made in good
22 faith; and (3) in the alternative significantly reducing the expert witness fees submitted by
23 defendants in their Memorandum of Costs.
24 In the Introduction to the Memorandum of Points & Authorities, plaintiffs specified item
25 13 as the line item on the memorandum of costs that sought expert witness fees However, those
26 fees, as defendant CA Construction points out in its opposition, were sought under line item 8; it
27 was the mediation costs that were sought under Item 13 and which are not recoverable.
28
Reply to Motion to Tax Costs - I
1 In the opposition, CA Construction claims that Plaintiffs mischaracterize the burden of
2 proof, asserting that the filing of a verified cost memorandum is prima facie evidence that the
3 costs were reasonable and necessary, ifthe items appear proper. But plaintiffs were not asserting
4 that the mere filing of a motion to tax somehow shifts the burden. Plaintiffs were asserting that
5 there were several legal bases on which this Court may and should tax the costs in their entirety;
6 in the altemative, this Court may and should tax certain ofthe costs as not recoverable.
7 Obviously if CA Construction was not the prevailing party for an award of costs, then
8 none ofthe costs claimed are recoverable—regardless of how "proper" they appear to be. (Code
9 Civ.Proc. § 1032(a)(4); Wolfv Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107
10 1141-1142.)
II Additionally, if this Court determines that CA Construction's Code of Civil Procedure
12 section 998 offer was not made in good faith—that it was a token offer made without risk and in
13 order to obtain expert fees in the event of a defense verdict—then this Court may and should tax
14 all such costs (Code Civ.Proc. § 998(c); Arno v Helmet Corp (2005) 130 Cal.App.4th 1019,
15 1024-1025.) Such is the case regardless of how "proper" the costs might appear on their face.
16 Also, Plaintiff asserts that certain costs do not "appear" to be proper, namely the over
17 $65,000.00 claimed for expert costs and the $2,400.00 which were apparently for mediation
18 costs. These individual issues will be discussed below
19
20 B. This Court Should Exercise Its Discretion to Find That Neither Party Prevailed for
an Award of Costs
21
22 1. This court has such discretion
23 In its opposition, CA Construction cites McLarand, Vasquez & Partners, Inc v Downey
24 Savings & Loan Assn (1991) 231 Cal.App.3d 1450, 1455 as authority for the proposition that
25 when neither the plaintiff/cross-defendant nor the defendant/cross-complainant prevails on their
26 claims, the defendant/cross-complainant is the prevailing party. This case is not valid authority
27 for this proposition. As noted in Silver Creek, LLC v Blackrock Realty Advisors, Inc. (2009)
28 173 Cal.App.4th 1533, 1541, cases decided before Hsu v Abbara (1995) 9 Cal.4th 863 do not
Reply to Motion to Tax Costs - 2
1 reliably state the law regarding prevailing parties where the plaintiff/cross-defendant and
2 defendant/cross-complaint each prevail on their claims. That Court noted, "Blackrock's reliance
3 on Hilltop Investment Associates v. Leon (1994) 28 Cal.App 4th 462 (Hilltop), McLarand,
4 Vasquez & Partners, Inc v Downey Savings & Loan Assn (1991) 231 Cal.App.3d 1450
5 (McLarand) and Kytasty v Godwin (1980) 102 Cal.App.3d 762 (Kytasty) is misplaced because
6 these cases were all decided before Hsu." (Silver Creek, supra at p. 1541.)
7 As set forth in Hsu v Abbara (1995) 9 Cal.4th 863, 875 at fn. 10, "When there are cross-
8 actions on a contract containing an attorney fees provision, and no relief is awarded in eithei
9 action, a trial court is not obligated to find that there is no party prevailing on the contract for
10 purposes of section 1717. Ifthe court concludes that the defendant's cross-action against the
11 plaintiff was essentially defensive in nature, it may properly find the defendant to be the party
12 prevailing on the contract." This allows this Court, in its discretion, to determine that CA
13 Construction is the prevailing party. But it also permits this Court to determine that neither party
14 prevailed. Contrary to defendant's assertions in arguments B.l. and B.3., this Court is not
15 required to find that CA Construction was the prevailing party for an award of costs.
16 Contrary to defendant's assertion in argument B.3., plaintiffs are not asserting that they
17 are prevailing parties and should be awarded costs and attomey fees in this litigation. Plaintiffs
18 simply assert that, under the principles enunciated in Hsu v Abbara (1995) 9 Cal.4th 863 and
19 Code of Civil Procedure section 1032(a)(4), neither party has completely prevailed, and this
20 Court thus has the discretion to not award costs to either party.
21 CA Constmction's statement that there can only be one prevailing party is misguided and
22 fails to take into account the clear law in Hsu v Abbara (1995) 9 Cal.4th 863 and Code ofCivil
23 Procedure section 1032(a)(4). That plaintiffs prevailed on CA Constmction's cross-complaint at
24 the pleading stage rather than at trial is of no consequence; nor does defendant cite to any
25 authority stating that prevailing pre-trial—or even on a motion forjudgment on the pleadings—
26 somehow dilutes the effect of having prevailed on the cross-complaint. That the trial court
27 permitted CA Construction to retain its affirmative defenses likewise does not dilute the effect of
28 plaintiffs having prevailed on the cross-complaint. CA Construction fought vigorously to
Reply to Motion to Tax Costs - 3
1 maintain its cross-complaint, asserting that it was entitled to recover monetary damages against
2 plaintiffs as owner/builder ofthe house. And plaintiffs' failure to file their own memorandum of
3 costs after prevailing on the cross-complaint is not relevant to this issue. That plaintiffs wished
4 to file such memorandum of costs after prevailing on the entirety of the action (as was their
5 intention) does not mean they did not prevail on the cross-complaint.
6
7 2. This Court should exercise its discretion to deny either party costs
8 CA Constmction argues that this Court should exercise its discretion to award it costs
9 Plaintiffs assert that this Court should exercise its discretion to deny all such costs. Given that
10 the jury found CA Constmction was negligent and that it wilfully departed from accepted trade
11 standards, this Court should exercise its discretion to deny costs to CA Construction. Defendant
12 states it "defeated every one of plaintiffs claims." But it did so narrowly. This was not a
13 situation in which the jury found CA Constmction without fault On the contrary, it found that
14 CA was negligent and that it wilfully departed from accepted trade standards The only reason
15 CA Construction escaped from trial with a defense verdict is that the jury found the negligence
16 and wilful departure form trade standards was not a substantial factor in causing plaintiffs harm.
17 Rather than rewarding CA Construction for its negligence and poor work, this Court
18 should acknowledge that plaintiffs prevailed on CA Construction's action against them, and
19 determine that neither party "prevailed" for purposes of awarding costs.
20
21 C. CA Construction's Section 998 Offer Was not Issued in Good Faith
22 In their opposition, CA Constmction argues that its offer to compromise was valid,
23 enforceable, and in good faith, thus entitling them to certain penalties. This is inaccurate.
24 Plaintiffs dispute the validity and good-faith nature of the offer As set forth in the
25 opposition papers, the section 998 offer was made on May 1, 2009. This was well before
26 plaintiffs motion for judgment on the pleadings was granted as to CA Construction's cross
27 complaint. (See Exh A to plaintiffs moving papers.) The section 998 offer did not offer that
28 judgment be taken in plaintiffs' favor as against CA Construction; it merely offered to pay
Reply to Motion to Tax Costs - 4
1 plaintiffs $25,000.00 "in exchange for a dismissal of Plaintiffs RODNEY and FLORENTINE
2 ABBOTT's causes ofaction, with prejudice, and the execution ofa general release ofall claims
3 known and unknown as to CA CONSTRUCTION, each party to bear its own attorneys fees and
4 costs " (Exh A to CA Constmction's opposition papers.) The offer makes no mention of the
5 dismissal ofthe cross-complaint as against plaintiffs. As of May 1, 2009, plaintiffs had not
6 settled with Ronald Britschgi; had plaintiffs accepted this 998 offer, they may well have found
7 themselves owing CA Constmction more than $25,000 on CA Construction's cross-complaint
8 against them. Thus, it cannot be said, with certainty, that the offer of $25,000 necessarily
9 exceeded plaintiffs' recovery.
10 Section 998(b) provides, "Not less than 10 days prior to commencement of trial oi
II arbitration . . . any party may serve an offer in writing upon any other party to the action to allow
12 judgment to be taken or an award to be entered in accordance with the terms and conditions
13 stated at that time." (Code Civ.Proc. §998(b).) But defendant's 998 offer did not offer to have
14 judgment taken against CA Constmction; it merely offered to have plaintiffs dismiss their own
15 complaint and then waive any other claims they may have against CA Construction—whether
16 known or unknown—and still allow CA Construction to proceed with its own cross-action
17 against plaintiffs in exchange for $25,000. This offer was not made in good faith, as it permitted
18 CA Construction to continue to maintain its own cross-complaint while requiring plaintiffs to
19 waive any and all claims against it, whether known or unknovm
20 The offer also not made in good faith because the amount was woefully low CA
21 Constmction cites Culbertson v R D Werner Co, Inc (1987) 190 CaI.App.3d 704, 710 in
22 support of its assertion that even a "modesf' settlement offer might be considered to be in good
23 faith if defendant has a significant likelihood of prevailing at trial. But in Culbertson, supra,
24 pretrial discovery revealed significant flaws in plaintiffs case (Id at pp. 706-707 ["The results
25 of defendant's discovery not only included the fact that the ladder had been modified after it had
26 left the possession ofthe defendant, but also: (1) investigation films showing plaintiff engaging
27 in strenuous activities which were inconsistent with his claimed injuries, (2) an independent
28 medical examination indicated a degenerative lumbar disc disease which antedated plaintiffs
Reply to Motion to Tax Costs - 5
1 accident, (3) the discovery ofa back injury 15 years earlier requiring approximately 10 months
2 of treatment, (4) interrogatories and depositions of other employees of plaintiff s employer, and
3 (5) depositions of employees of two subcontractors that plaintiffs employer used to recondition
4 the ladders."]) Given these high hurdles, the court determined that defendant's offer of $5,000
5 was made in good faith. (Id. at p. 712.) This was especially true given the jury verdict was 12-0
6 in favor of defendants. (Id. at p. 710 at fn. 4.)
7 Here, in contrast, defendant points to nothing that would alerted plaintiffs in May 1, 2009
8 that their case was so poor that an offer of $25,000 was reasonable. Defendant notes that
9 plaintiffs were seeking over $700,000 to rebuild their house That the jury actually found CA
10 Construction negligent and that they wilfully departed from accepted trade standards must also
11 factor into the analysis, as must the fact that 3 ofthe 12 jurors thought CA Construction was
12 liable to plaintiffs. It was simply not reasonable to expect plaintiffs to waive all of their claims
13 known and unknown, a«J continue as cross-defendants in exchange for $25,000 in May 2009.
14 Elrod V Oregon Cummings Diesel, Inc (1987) 195 Cal App.3d 692 further drives this
15 point home. In that case, the court the court stated.
16 Section 998 should be interpreted so as to effectuate its purpose of encouraging
the settlement of lawsuits before trial. [Citations.] Section 998 achieves its aim
17
by punishing a party who fails to accept a reasonable offer from the other party.
18 [Citations ] An offeree cannot be expected to accept an unreasonable offer
Hence, any subsequent punishment of the offeree for nonacceptance does not
19 further the purpose of section 998, because the offeree would not have acted
differently at the time of the offer despite the threat of later punishment In these
20
circumstances, later punishment of the offeree merely provides a windfall to the
21 offeror and does not encourage settlements
22 (Id. at pp. 698-699, emphasis added.)
23 Likewise, here, punishing plaintiffs for failing to accept CA Construction's token offer ot
24 $25,000.00 (which could have been reduced or even negated by CA Constmction's cross
25 complaint) does not serve the purpose of the statute. Instead, it unfairly rewards defendant foi
26 making a token offer This Court may and should refuse to award any costs to CA Construction
27 under Code ofCivil Procedure section 998.
28
Reply to Motion to Tax Costs - 6
D. The Claimed Expert Costs Should Be Taxed
2 1. This Court should tax all expert costs
3 If this Court determines that CA Construction is entitled to costs under section 998,
4 plaintiffs request this Court exercise its discretion to not award any expert costs under section
5 998(c). This section makes such award discretionary. As noted above, CA Construction should
6 not be rewarded by a windfall, and plaintiffs punished, as a result ofthe $25,000 offer
7
8 2. The claimed costs are not reasonable
9 In the alternative, if this Court determines that CA Construction is entitled to expert costs
10 under section 998(c), plaintiffs request this Court significantly reduce the claimed costs.
11 In their motion, plaintiffs asserted that defense expert Jason Newlin's 211.25 hours and
12 David Hereyet's 136.50 hours for pre-trial work were not reasonably necessary. In making the
13 motion, plaintiff did not have access to those experts or their billing records; Plaintiff argued
14 that, based upon the testimony Mr. Newlin and Mr. Heryet provided at trial, they did not seem to
15 have spent nearly the time billed on the case. Their testimony was fairly limited. Mr Newlin
16 testified as to the cracks and opined that there was no fill under the garage. But despite billing
17 over 210 hours, he did not prepare a report and did not perform his own analysis ofthe slope ol
18 the garage floor. Mr. Heryet provided an analysis of the costs of raising the level of the house.
19 Other than this analysis, his testimony as to the standard of care was based upon the assumption
20 that the Abbotts had approved all of CA Construction's work by and through Ronald Britschgi.
21 As plaintiffs noted, Mr. Newlin was only disclosed as an expert witness in a supplemental
22 disclosure on April 10, 2009, based upon a May 11, 2009 trial date. In fact, defense experts
23 should have been ready to testify according to the May 11, 2009 trial date. According to the
24 billing statements—which plaintiffs only saw for the first time with the opposition papers—Mr.
25 Newlin billed 21 hours in April, 2009 (See "Expert Fees" to Defendant's Opposition at p 7'.)
26 In May, 2009, he had spent another 22 25 hours ("Expert Fees" at p. 8.) Prior to his disclosure
27
28
' / For ease of reference, the page number refers to the number on the upper right hand side ofthe page, and is
apparently the faxed page number The first page ofthe document is numbered "p 2 "
Reply to Motion to Tax Costs - 7
as an expert, he apparentiy billed 17.25 hours. (Epxert Fees at p. 4 ) And yet he was not
disclosed as a retained expert in CA Construction's expert disclosure; he was only disclosed as a
supplemental expert on April 10, 2009—after he had billed the 17.25 hours. Thus, as ofthe date
this case was set for trial—and on which Mr Newlin should have been prepared with his
opinions—he had spent a total of 60.5 hours, only 43 of which was as a retained expert. He then
spent an additional 150.75 hours after he should already have been ready to be deposed by
plaintiffs and ready for trial. Based upon the billing statements, if this Court determines that CA
Construction is entitied to recover expert witness fees under section 998, it should only award as
pre-trial expert fees for Mr. Newlin the 43 hours he spent in April and May 2009 at $180 00 an
10 hour, for a total of $7,740.00.
II According to the billing statements, Mr. Heryet began working on the case in March
12 2008. (Expert Fees at p. 2.) As of May 15, 2009, he had spent 59 hours on the case. The
13 remaining 77.5 hours were spent after May 15, 2009, and thus after he should already have been
14 prepared to testify at deposition and at trial. And yet even these 59 hours does not appear to be
15 "reasonable and necessary" as required under Code of Civil Procedure section 998(c). A lot oi
16 this time appeared to be spent on "discussions" with various individuals and thus not actual trial
17 preparation. Based upon the billing statements, if this Court determines that CA Construction is
18 entitled to recover expert witness fees under section 998, it should only award as pre-trial expert
19 fees for Mr. Heryet 50 hours for time he spent through May 2009 at $200.00 an hour, for a total
20 of$10,000.00.
21
22 E. There Is no Legal Basis for an Award of $2,400 in Mediation Costs
23 As noted above, plaintiffs were mistaken in their moving papers as to the source of the
24 $2,400 claimed in item 13 ofthe cost memorandum. As clarified by CA Construction in the
25 opposition, this was for mediation costs.
26 CA Construction seeks to justify this $2,400 under Code of Civil Procedure section 998
27 But nothing in that section allows for the recovery of mediation costs. That statute provides that
28 the plaintiff who fails to beat the 998 offer is required to pay the defendant's costs from the date
Reply to Motion to Tax Costs - 8
1 of the offer. (Code Civ.Proc. §998(c)) It further provides that the court may, in its discretion,
2 require the plaintiff to pay "a reasonable sum to cover costs of the services of expert witnesses
3 who are not regular employees of any party, actually incurred and reasonably necessary in either
4 or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the
5 defendant." (Code Civ.Proc. §998(c).) This statute says nothing about mediation costs.
6 Defendant does not even attempt to justify these costs under section 1033.5. There is simply no
7 legal basis for defendant to recover this sum. It must be taxed in its entirety.
8
9 F. Conclusion
10 Because each side prevailed on the complaint filed against it, as the defendant and cross
11 defendant, respectively, this Court may and should determine that neither party prevailed foi
12 purposes of a costs award, and may and should tax the claimed costs in their entirety. (Code
13 Civ Proc. § 1032(a)(4)) In the altemative, this Court should determine that CA Construction is
14 not entitled to any costs under Code of Civil Procedure section 998, or at least not any expert
15 costs. And if this Court is inclined to award expert costs, such must be significantly reduced
16 There is no legal basis for an award of $2,400 in mediation costs and those must be J&xed in theii
17 entirety.
18
19 Dated: March 30, 2011
Stephanie J. Flnelt
20
Attomey for Plaintiffs,
21 Florentine & Rodney Abbott
22
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Reply to Motion to Tax Costs - 9
PROOF OF SERVICE BY MAIL
CASE NAME: Abbott v. Britschgi
CASE NUMBER- Sacramento County Superior Court 07AS04450
I declare that:
I am a citizen ofthe United States and a resident ofthe County of Sacramento. I am,
and at all times mentioned herein was, an active member of the State Bar of Califomia and
not a party to the above-entitied cause. My business address is 1007 Seventh Street, Suite
500, Sacramento, Califomia 95814
On March 30, 2011, pursuant to CCP §1013A(2), I served the following:
REPLY TO OPPOSITION TO MOTION TO TAX COSTS
BY MAIL: by depositing a copy of said document in the United States mail in Sacramento,
Califomia, in a sealed envelope, with postage fiilly prepaid, addressed as follows:
Gregory Federico
Archer Noms
301 University Ave., Suite IIO
Sacramento, CA 95825
I declare under penalty of perjury under the laws of/^hg-S\tate^^ Califomia the
foregoing is tme and correct.
Dated March 30, 2011
'Stephanie J. Finelli
Preview
1 STEPHANIE J. FINELLI, SBN 173462 Law Office of Stephanie J. Finelli FILE?/^:"^^"^^^^ }1 vi laj* i, J a ^ t ) 1"^ li 2 1007-7th Street, Suite 500 Sacramento, CA 95814 3 tel 916-443-2144 MAR 3 0 2011 fax 916-443-1511 4 Attomey for Plaintiffs, By _D .|nH;-'S'"'l 5 FLORENTINE and RODNEY ABBOTT 6 7 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 IN AND FOR THE COUNTY OF SACRAMENTO 9 10 FLORENTINE AND RODNEY ABBOTT, CaseNo.: 07AS04450 II Plaintiffs, REPLY TO OPPOSITION TO MOTION TO TAX COSTS 12 vs. 13 RONALD BRITSCHGI, et. al.. Trial Date: January 18, 2011 Judgment: February 3, 2011 14 Defendants Hearing: April 8, 2011 15 Time: 9:30 a.m. Dept: 43 16 and related cross-actions Judge: Brian Van Camp 17 18 A. Plaintiffs Did not Mischaracterize the Burden of Proof 19 In their Motion to Tax Costs, plaintiffs moved this Court for an order (1) taxing the cost 20 memorandum in its entirety on the basis that defendants are not necessarily the prevailing party; 21 (2) taxing all expert witness fees on the grounds that the section 998 offer was not made in good 22 faith; and (3) in the alternative significantly reducing the expert witness fees submitted by 23 defendants in their Memorandum of Costs. 24 In the Introduction to the Memorandum of Points & Authorities, plaintiffs specified item 25 13 as the line item on the memorandum of costs that sought expert witness fees However, those 26 fees, as defendant CA Construction points out in its opposition, were sought under line item 8; it 27 was the mediation costs that were sought under Item 13 and which are not recoverable. 28 Reply to Motion to Tax Costs - I 1 In the opposition, CA Construction claims that Plaintiffs mischaracterize the burden of 2 proof, asserting that the filing of a verified cost memorandum is prima facie evidence that the 3 costs were reasonable and necessary, ifthe items appear proper. But plaintiffs were not asserting 4 that the mere filing of a motion to tax somehow shifts the burden. Plaintiffs were asserting that 5 there were several legal bases on which this Court may and should tax the costs in their entirety; 6 in the altemative, this Court may and should tax certain ofthe costs as not recoverable. 7 Obviously if CA Construction was not the prevailing party for an award of costs, then 8 none ofthe costs claimed are recoverable—regardless of how "proper" they appear to be. (Code 9 Civ.Proc. § 1032(a)(4); Wolfv Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107 10 1141-1142.) II Additionally, if this Court determines that CA Construction's Code of Civil Procedure 12 section 998 offer was not made in good faith—that it was a token offer made without risk and in 13 order to obtain expert fees in the event of a defense verdict—then this Court may and should tax 14 all such costs (Code Civ.Proc. § 998(c); Arno v Helmet Corp (2005) 130 Cal.App.4th 1019, 15 1024-1025.) Such is the case regardless of how "proper" the costs might appear on their face. 16 Also, Plaintiff asserts that certain costs do not "appear" to be proper, namely the over 17 $65,000.00 claimed for expert costs and the $2,400.00 which were apparently for mediation 18 costs. These individual issues will be discussed below 19 20 B. This Court Should Exercise Its Discretion to Find That Neither Party Prevailed for an Award of Costs 21 22 1. This court has such discretion 23 In its opposition, CA Construction cites McLarand, Vasquez & Partners, Inc v Downey 24 Savings & Loan Assn (1991) 231 Cal.App.3d 1450, 1455 as authority for the proposition that 25 when neither the plaintiff/cross-defendant nor the defendant/cross-complainant prevails on their 26 claims, the defendant/cross-complainant is the prevailing party. This case is not valid authority 27 for this proposition. As noted in Silver Creek, LLC v Blackrock Realty Advisors, Inc. (2009) 28 173 Cal.App.4th 1533, 1541, cases decided before Hsu v Abbara (1995) 9 Cal.4th 863 do not Reply to Motion to Tax Costs - 2 1 reliably state the law regarding prevailing parties where the plaintiff/cross-defendant and 2 defendant/cross-complaint each prevail on their claims. That Court noted, "Blackrock's reliance 3 on Hilltop Investment Associates v. Leon (1994) 28 Cal.App 4th 462 (Hilltop), McLarand, 4 Vasquez & Partners, Inc v Downey Savings & Loan Assn (1991) 231 Cal.App.3d 1450 5 (McLarand) and Kytasty v Godwin (1980) 102 Cal.App.3d 762 (Kytasty) is misplaced because 6 these cases were all decided before Hsu." (Silver Creek, supra at p. 1541.) 7 As set forth in Hsu v Abbara (1995) 9 Cal.4th 863, 875 at fn. 10, "When there are cross- 8 actions on a contract containing an attorney fees provision, and no relief is awarded in eithei 9 action, a trial court is not obligated to find that there is no party prevailing on the contract for 10 purposes of section 1717. Ifthe court concludes that the defendant's cross-action against the 11 plaintiff was essentially defensive in nature, it may properly find the defendant to be the party 12 prevailing on the contract." This allows this Court, in its discretion, to determine that CA 13 Construction is the prevailing party. But it also permits this Court to determine that neither party 14 prevailed. Contrary to defendant's assertions in arguments B.l. and B.3., this Court is not 15 required to find that CA Construction was the prevailing party for an award of costs. 16 Contrary to defendant's assertion in argument B.3., plaintiffs are not asserting that they 17 are prevailing parties and should be awarded costs and attomey fees in this litigation. Plaintiffs 18 simply assert that, under the principles enunciated in Hsu v Abbara (1995) 9 Cal.4th 863 and 19 Code of Civil Procedure section 1032(a)(4), neither party has completely prevailed, and this 20 Court thus has the discretion to not award costs to either party. 21 CA Constmction's statement that there can only be one prevailing party is misguided and 22 fails to take into account the clear law in Hsu v Abbara (1995) 9 Cal.4th 863 and Code ofCivil 23 Procedure section 1032(a)(4). That plaintiffs prevailed on CA Constmction's cross-complaint at 24 the pleading stage rather than at trial is of no consequence; nor does defendant cite to any 25 authority stating that prevailing pre-trial—or even on a motion forjudgment on the pleadings— 26 somehow dilutes the effect of having prevailed on the cross-complaint. That the trial court 27 permitted CA Construction to retain its affirmative defenses likewise does not dilute the effect of 28 plaintiffs having prevailed on the cross-complaint. CA Construction fought vigorously to Reply to Motion to Tax Costs - 3 1 maintain its cross-complaint, asserting that it was entitled to recover monetary damages against 2 plaintiffs as owner/builder ofthe house. And plaintiffs' failure to file their own memorandum of 3 costs after prevailing on the cross-complaint is not relevant to this issue. That plaintiffs wished 4 to file such memorandum of costs after prevailing on the entirety of the action (as was their 5 intention) does not mean they did not prevail on the cross-complaint. 6 7 2. This Court should exercise its discretion to deny either party costs 8 CA Constmction argues that this Court should exercise its discretion to award it costs 9 Plaintiffs assert that this Court should exercise its discretion to deny all such costs. Given that 10 the jury found CA Constmction was negligent and that it wilfully departed from accepted trade 11 standards, this Court should exercise its discretion to deny costs to CA Construction. Defendant 12 states it "defeated every one of plaintiffs claims." But it did so narrowly. This was not a 13 situation in which the jury found CA Constmction without fault On the contrary, it found that 14 CA was negligent and that it wilfully departed from accepted trade standards The only reason 15 CA Construction escaped from trial with a defense verdict is that the jury found the negligence 16 and wilful departure form trade standards was not a substantial factor in causing plaintiffs harm. 17 Rather than rewarding CA Construction for its negligence and poor work, this Court 18 should acknowledge that plaintiffs prevailed on CA Construction's action against them, and 19 determine that neither party "prevailed" for purposes of awarding costs. 20 21 C. CA Construction's Section 998 Offer Was not Issued in Good Faith 22 In their opposition, CA Constmction argues that its offer to compromise was valid, 23 enforceable, and in good faith, thus entitling them to certain penalties. This is inaccurate. 24 Plaintiffs dispute the validity and good-faith nature of the offer As set forth in the 25 opposition papers, the section 998 offer was made on May 1, 2009. This was well before 26 plaintiffs motion for judgment on the pleadings was granted as to CA Construction's cross 27 complaint. (See Exh A to plaintiffs moving papers.) The section 998 offer did not offer that 28 judgment be taken in plaintiffs' favor as against CA Construction; it merely offered to pay Reply to Motion to Tax Costs - 4 1 plaintiffs $25,000.00 "in exchange for a dismissal of Plaintiffs RODNEY and FLORENTINE 2 ABBOTT's causes ofaction, with prejudice, and the execution ofa general release ofall claims 3 known and unknown as to CA CONSTRUCTION, each party to bear its own attorneys fees and 4 costs " (Exh A to CA Constmction's opposition papers.) The offer makes no mention of the 5 dismissal ofthe cross-complaint as against plaintiffs. As of May 1, 2009, plaintiffs had not 6 settled with Ronald Britschgi; had plaintiffs accepted this 998 offer, they may well have found 7 themselves owing CA Constmction more than $25,000 on CA Construction's cross-complaint 8 against them. Thus, it cannot be said, with certainty, that the offer of $25,000 necessarily 9 exceeded plaintiffs' recovery. 10 Section 998(b) provides, "Not less than 10 days prior to commencement of trial oi II arbitration . . . any party may serve an offer in writing upon any other party to the action to allow 12 judgment to be taken or an award to be entered in accordance with the terms and conditions 13 stated at that time." (Code Civ.Proc. §998(b).) But defendant's 998 offer did not offer to have 14 judgment taken against CA Constmction; it merely offered to have plaintiffs dismiss their own 15 complaint and then waive any other claims they may have against CA Construction—whether 16 known or unknown—and still allow CA Construction to proceed with its own cross-action 17 against plaintiffs in exchange for $25,000. This offer was not made in good faith, as it permitted 18 CA Construction to continue to maintain its own cross-complaint while requiring plaintiffs to 19 waive any and all claims against it, whether known or unknovm 20 The offer also not made in good faith because the amount was woefully low CA 21 Constmction cites Culbertson v R D Werner Co, Inc (1987) 190 CaI.App.3d 704, 710 in 22 support of its assertion that even a "modesf' settlement offer might be considered to be in good 23 faith if defendant has a significant likelihood of prevailing at trial. But in Culbertson, supra, 24 pretrial discovery revealed significant flaws in plaintiffs case (Id at pp. 706-707 ["The results 25 of defendant's discovery not only included the fact that the ladder had been modified after it had 26 left the possession ofthe defendant, but also: (1) investigation films showing plaintiff engaging 27 in strenuous activities which were inconsistent with his claimed injuries, (2) an independent 28 medical examination indicated a degenerative lumbar disc disease which antedated plaintiffs Reply to Motion to Tax Costs - 5 1 accident, (3) the discovery ofa back injury 15 years earlier requiring approximately 10 months 2 of treatment, (4) interrogatories and depositions of other employees of plaintiff s employer, and 3 (5) depositions of employees of two subcontractors that plaintiffs employer used to recondition 4 the ladders."]) Given these high hurdles, the court determined that defendant's offer of $5,000 5 was made in good faith. (Id. at p. 712.) This was especially true given the jury verdict was 12-0 6 in favor of defendants. (Id. at p. 710 at fn. 4.) 7 Here, in contrast, defendant points to nothing that would alerted plaintiffs in May 1, 2009 8 that their case was so poor that an offer of $25,000 was reasonable. Defendant notes that 9 plaintiffs were seeking over $700,000 to rebuild their house That the jury actually found CA 10 Construction negligent and that they wilfully departed from accepted trade standards must also 11 factor into the analysis, as must the fact that 3 ofthe 12 jurors thought CA Construction was 12 liable to plaintiffs. It was simply not reasonable to expect plaintiffs to waive all of their claims 13 known and unknown, a«J continue as cross-defendants in exchange for $25,000 in May 2009. 14 Elrod V Oregon Cummings Diesel, Inc (1987) 195 Cal App.3d 692 further drives this 15 point home. In that case, the court the court stated. 16 Section 998 should be interpreted so as to effectuate its purpose of encouraging the settlement of lawsuits before trial. [Citations.] Section 998 achieves its aim 17 by punishing a party who fails to accept a reasonable offer from the other party. 18 [Citations ] An offeree cannot be expected to accept an unreasonable offer Hence, any subsequent punishment of the offeree for nonacceptance does not 19 further the purpose of section 998, because the offeree would not have acted differently at the time of the offer despite the threat of later punishment In these 20 circumstances, later punishment of the offeree merely provides a windfall to the 21 offeror and does not encourage settlements 22 (Id. at pp. 698-699, emphasis added.) 23 Likewise, here, punishing plaintiffs for failing to accept CA Construction's token offer ot 24 $25,000.00 (which could have been reduced or even negated by CA Constmction's cross 25 complaint) does not serve the purpose of the statute. Instead, it unfairly rewards defendant foi 26 making a token offer This Court may and should refuse to award any costs to CA Construction 27 under Code ofCivil Procedure section 998. 28 Reply to Motion to Tax Costs - 6 D. The Claimed Expert Costs Should Be Taxed 2 1. This Court should tax all expert costs 3 If this Court determines that CA Construction is entitled to costs under section 998, 4 plaintiffs request this Court exercise its discretion to not award any expert costs under section 5 998(c). This section makes such award discretionary. As noted above, CA Construction should 6 not be rewarded by a windfall, and plaintiffs punished, as a result ofthe $25,000 offer 7 8 2. The claimed costs are not reasonable 9 In the alternative, if this Court determines that CA Construction is entitled to expert costs 10 under section 998(c), plaintiffs request this Court significantly reduce the claimed costs. 11 In their motion, plaintiffs asserted that defense expert Jason Newlin's 211.25 hours and 12 David Hereyet's 136.50 hours for pre-trial work were not reasonably necessary. In making the 13 motion, plaintiff did not have access to those experts or their billing records; Plaintiff argued 14 that, based upon the testimony Mr. Newlin and Mr. Heryet provided at trial, they did not seem to 15 have spent nearly the time billed on the case. Their testimony was fairly limited. Mr Newlin 16 testified as to the cracks and opined that there was no fill under the garage. But despite billing 17 over 210 hours, he did not prepare a report and did not perform his own analysis ofthe slope ol 18 the garage floor. Mr. Heryet provided an analysis of the costs of raising the level of the house. 19 Other than this analysis, his testimony as to the standard of care was based upon the assumption 20 that the Abbotts had approved all of CA Construction's work by and through Ronald Britschgi. 21 As plaintiffs noted, Mr. Newlin was only disclosed as an expert witness in a supplemental 22 disclosure on April 10, 2009, based upon a May 11, 2009 trial date. In fact, defense experts 23 should have been ready to testify according to the May 11, 2009 trial date. According to the 24 billing statements—which plaintiffs only saw for the first time with the opposition papers—Mr. 25 Newlin billed 21 hours in April, 2009 (See "Expert Fees" to Defendant's Opposition at p 7'.) 26 In May, 2009, he had spent another 22 25 hours ("Expert Fees" at p. 8.) Prior to his disclosure 27 28 ' / For ease of reference, the page number refers to the number on the upper right hand side ofthe page, and is apparently the faxed page number The first page ofthe document is numbered "p 2 " Reply to Motion to Tax Costs - 7 as an expert, he apparentiy billed 17.25 hours. (Epxert Fees at p. 4 ) And yet he was not disclosed as a retained expert in CA Construction's expert disclosure; he was only disclosed as a supplemental expert on April 10, 2009—after he had billed the 17.25 hours. Thus, as ofthe date this case was set for trial—and on which Mr Newlin should have been prepared with his opinions—he had spent a total of 60.5 hours, only 43 of which was as a retained expert. He then spent an additional 150.75 hours after he should already have been ready to be deposed by plaintiffs and ready for trial. Based upon the billing statements, if this Court determines that CA Construction is entitied to recover expert witness fees under section 998, it should only award as pre-trial expert fees for Mr. Newlin the 43 hours he spent in April and May 2009 at $180 00 an 10 hour, for a total of $7,740.00. II According to the billing statements, Mr. Heryet began working on the case in March 12 2008. (Expert Fees at p. 2.) As of May 15, 2009, he had spent 59 hours on the case. The 13 remaining 77.5 hours were spent after May 15, 2009, and thus after he should already have been 14 prepared to testify at deposition and at trial. And yet even these 59 hours does not appear to be 15 "reasonable and necessary" as required under Code of Civil Procedure section 998(c). A lot oi 16 this time appeared to be spent on "discussions" with various individuals and thus not actual trial 17 preparation. Based upon the billing statements, if this Court determines that CA Construction is 18 entitled to recover expert witness fees under section 998, it should only award as pre-trial expert 19 fees for Mr. Heryet 50 hours for time he spent through May 2009 at $200.00 an hour, for a total 20 of$10,000.00. 21 22 E. There Is no Legal Basis for an Award of $2,400 in Mediation Costs 23 As noted above, plaintiffs were mistaken in their moving papers as to the source of the 24 $2,400 claimed in item 13 ofthe cost memorandum. As clarified by CA Construction in the 25 opposition, this was for mediation costs. 26 CA Construction seeks to justify this $2,400 under Code of Civil Procedure section 998 27 But nothing in that section allows for the recovery of mediation costs. That statute provides that 28 the plaintiff who fails to beat the 998 offer is required to pay the defendant's costs from the date Reply to Motion to Tax Costs - 8 1 of the offer. (Code Civ.Proc. §998(c)) It further provides that the court may, in its discretion, 2 require the plaintiff to pay "a reasonable sum to cover costs of the services of expert witnesses 3 who are not regular employees of any party, actually incurred and reasonably necessary in either 4 or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the 5 defendant." (Code Civ.Proc. §998(c).) This statute says nothing about mediation costs. 6 Defendant does not even attempt to justify these costs under section 1033.5. There is simply no 7 legal basis for defendant to recover this sum. It must be taxed in its entirety. 8 9 F. Conclusion 10 Because each side prevailed on the complaint filed against it, as the defendant and cross 11 defendant, respectively, this Court may and should determine that neither party prevailed foi 12 purposes of a costs award, and may and should tax the claimed costs in their entirety. (Code 13 Civ Proc. § 1032(a)(4)) In the altemative, this Court should determine that CA Construction is 14 not entitled to any costs under Code of Civil Procedure section 998, or at least not any expert 15 costs. And if this Court is inclined to award expert costs, such must be significantly reduced 16 There is no legal basis for an award of $2,400 in mediation costs and those must be J&xed in theii 17 entirety. 18 19 Dated: March 30, 2011 Stephanie J. Flnelt 20 Attomey for Plaintiffs, 21 Florentine & Rodney Abbott 22 23 24 25 26 27 28 Reply to Motion to Tax Costs - 9 PROOF OF SERVICE BY MAIL CASE NAME: Abbott v. Britschgi CASE NUMBER- Sacramento County Superior Court 07AS04450 I declare that: I am a citizen ofthe United States and a resident ofthe County of Sacramento. I am, and at all times mentioned herein was, an active member of the State Bar of Califomia and not a party to the above-entitied cause. My business address is 1007 Seventh Street, Suite 500, Sacramento, Califomia 95814 On March 30, 2011, pursuant to CCP §1013A(2), I served the following: REPLY TO OPPOSITION TO MOTION TO TAX COSTS BY MAIL: by depositing a copy of said document in the United States mail in Sacramento, Califomia, in a sealed envelope, with postage fiilly prepaid, addressed as follows: Gregory Federico Archer Noms 301 University Ave., Suite IIO Sacramento, CA 95825 I declare under penalty of perjury under the laws of/^hg-S\tate^^ Califomia the foregoing is tme and correct. Dated March 30, 2011 'Stephanie J. Finelli