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Gordon & Rees Scully Mansukhani LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
170V314037
Santa Clara — Civil
Electronically Filed
SANDY M. KAPLAN (SBN: 095065)
ROBIN L. KRUTZSCH (SBN: 250059) by Superior Court of CA,
GORDON & REES SCULLY MANSUKHANI LLP County of Santa Clara,
275 BATTERY STREET, SUITE 2000 on 4/8/2021 2:43 PM
SAN FRANCISCO, CA 941 Reviewed By: R. Walker
TEL: (415) 986-5900 / FAX: (415) 986-8054 Case #17CV314037
skaplan@grsm.com; rkrutzsch@grsm.com Envelope: 6203782
Attorneys for Defendant and Cross-Complainant,
WEBCOR CONSTRUCTION, LP,
BRUCE W. LORBER (SBN 074719)
ROBERT B. TITUS (SBN 116299)
LORBER, GREENFIELD & POLITO, LLP
13985 STOWE DRIVE
POWAY, CA 92064
TEL: (858) 513-1020 / FAX: (858) 513-1002
blorber@lorberlaw.com; rtitus@lorberlaw.com
Attorneys for Intervenors THE INSURANCE COMPANY OF
THE STATE OF PENNSYLVANIA and LEXINGTON
INSURANCE COMPANY
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
AXIS HOMEOWNERS ASSOCIATION, a
California non-profit mutual benefit
corporation,
) CASE NO. 17CV314037
»)
) JOINT TRIAL MOTION NO. 15
Plaintiff, ; DEFENDANT WEBCOR
) CONSTRUCTON LP AND
v. ) INTERVENORS THE INSURANCE
COMPANY OF THE STATE OF
ALMADEN TOWER VENTURE, LLC. a ) PENNSYLVANIA and LEXINGTON
California limited liability company; WEBCOR ) INSURANCE COMPANY’S REPLY
CONSTRUCTION LP, DBA WEBCOR ) IN SUPPORT OF JOINT MOTION IN
BUILDERS, a California corporation and ) LIMINE TO EXCLUDE
DOES 1-400 inclusive, ) PLAINTIFF’S CLAIMS FOR
) EXPERT COSTS RELATING TO
)
)
7
)
)
7
Defendants. LITIGATION
DATE: APRIL 16, 2021
TIME: 9:00 A.M.
DEPT.: 10
AND RELATED CROSS-ACTION(S)
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DEFENDANT AND INTERVENORS’ REPLY FOR MOTION TO EXCLUDE EXPERT COSTS FOR LITIGATIONGordon & Rees Scully Mansukhani LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
Defendant WEBCOR CONSTRUCTION LP DBA WEBCOR BUILDERS and
Intervenors THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA AND
LEXINGTON INSURANCE COMPANY (jointly “Defendants”) hereby submit the following
Reply in support of their joint Motion in Limine to Exclude Plaintiff's Claims for Expert Costs
Relating to Litigation (“Motion”).
I INTRODUCTION
Plaintiff does not dispute that it cannot recover costs incurred for purposes of litigation
pursuant to the holdings in Stearman v. Centex Homes (2000) 78 Cal.App.4th 611, 625, E/
Escorial Owners’ Assn. v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, 1361-1362,
Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 83-89, and the language
in Civil Code section 944. In each of these holdings, the courts found that costs must be
incurred for purposes of investigation of the plaintiff's claims, including development of repair
recommendations, in order to be recoverable. As such, Plaintiff fails to refute the general
premise of Defendants’ Motion, which is that (1) Plaintiff only be allowed to present costs
where it prevails on its claim for violation of a standard, and (2) costs relating to the litigation
processes be excluded as evidence.
Matters pertaining to the evidence Plaintiff seeks to present at trial are appropriate for a
motion in limine. (People v. Morris (1991) 53 Cal. 3d 152, 188; see also Hyatt v. Sierra Boat
Co. (1978) 79 Cal.App.3d 325, 337.) Plaintiff’s contention to the contrary and its argument that
Defendant’s motion serves as a motion for summary adjudication is wholly misplaced. Motions
for summary adjudication may only be stated as to particular causes of action or defenses, unless
otherwise provided by stipulation of the parties and order of the court. (Code of Civil Procedure
§ 437c.) This motion pertains to specific testimony that Plaintiff seeks to present at trial, which
is more prejudicial to Defendants than it is probative to Plaintiff's defect claims. (Evid. Code §
352.) Thus, the issue herein is properly the subject of Defendants’ Motion.
For the reasons discussed herein and in the moving papers, this Court should grant
Defendants! Motion to exclude Plaintiff's evidence of expert costs that are incurred for
purposes of investigation of established violations.
ale
DEFENDANT AND INTERVENORS’ REPLY FOR MOTION TO EXCLUDE EXPERT COSTS FOR LITIGATIONGordon & Rees Scully Mansukhani LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
Il. ARGUMENT
A. Plaintiff Can Only Recover Reasonable Investigative Costs for Each
Established Violation.
Plaintiff may only recover certain categories of costs against Defendants. Plaintiff is
limited to recovery of "reasonable investigative costs for each established violation." (Civ.
Code § 944.) The Code does not define "investigative costs" but prior case law provides
guidance concerning a plaintiff's ability to recover expert costs in construction defect cases.
(Stearman v. Centex Homes, supra, 8 Cal.App.4th at 623-625; People v. Overstreet (1986) 42
Cal.3d 891, 897.) The cases cited by Plaintiff, E7 Escorial Owners’ Assn, supra, 154
Cal.App.4th at 1361-1362 and Gorman, supra, 178 Cal.App.4th at 83-89, confirm that expert
costs incurred for purposes of litigation are not recoverable.
Civil Code section 944 provides as follows with respect to recovery of expert costs:
If a claim for damages is made under this title, the homeowner is only
entitled to damages for ... reasonable investigative costs for each
established violation ...
As such, not only must the cost be incurred for purposes of investigation of Plaintiff's claims,
but it must also relate to an established violation. Accordingly Defendants request that the
court order that evidence of the following categories of expert work and costs be excluded:
. Litigation costs;
. Depositions and providing questions to Plaintiff's counsel for the
deposition of other witnesses;
. Mediations and settlement activities;
. Attending defense inspections and testing;
eI Trial prep; and
eI Preparation of plaintiff litigation and settlement reports.
Plaintiff is only allowed to recover reasonable investigative costs pursuant to Civil Code
944. Both E/ Escorial and Gorman follow the holding in Stearman and do not allow for
recovery of litigation-related costs. (E/ Escorial Owners' Assn, supra, 154 Cal.App.4th at
1361-1362 and Gorman, supra, 178 Cal.App.4th at 83-89.) None of these cases discusses the
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DEFENDANT AND INTERVENORS’ REPLY FOR MOTION TO EXCLUDE EXPERT COSTS FOR LITIGATIONGordon & Rees Scully Mansukhani LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
effect of service of a Notice of Claim under Civil Code section 910, as was done in this case.
Here, Plaintiff's Notices of Claims included detailed description of Plaintiff's claims as well as
the repair recommendations. (Declaration of Robin Krutzsch submitted in support of
Defendants Motions in Limine Nos. 9-15, Ex. C.) At the time Plaintiff served its Notice of
Claim, it was required to state and describe all actionable claims, and such notice further
includes repair recommendations for each item. As such, the presumptions should be that
Plaintiff had conducted its investigation prior to service of its Notices of Claims on or before
August 2, 2012.Moreover, where Plaintiff's experts’ work serves the sole purpose of
continued litigation, regardless of how it may be characterized by Plaintiff, such costs should
be excluded as both litigation-related and unreasonable. For such reason, Defendants propose
that recoverable costs be cut-off of as of the date of service of Plaintiff's last Notice of Claim.
The holding in Stearman is evaluated in detail in the Gorman case cited by Plaintiff.
(Gorman, supra, 178 Cal.App.4th at 83-89.) In that case the court requires detailed findings to
demonstrate that the requested expert costs were incurred for purposes of investigation and
development of repair recommendations. (/d. at 87-89.) The plaintiffs counsel’s declaration
stated that only investigative costs were included, and none for litigation; plaintiff's experts
submitted similar declarations. (/bid.) However, the court found fault with such declarations,
and pointed out particularly costs within the submitted expert invoices that would pertain to
litigation, including research and analysis of allegations, consultation for settlement
conference, preparation for mediation, and deposition preparation and travel. (/d. at 86, fn.27,
and 87-88.) The court entertained the idea that a cost of repair could be refined by experts over
time, but also questioned the credibility of, and basis for, the plaintiff's broad painting of their
extensive expert costs as investigative work. (/d. at 86-88.) In Gorman, the court remanded the
matter for further review, seeking additional evidence and explanation supporting the award of
costs. (/d. at 89.)
In contrast to the lengthy analysis in Gorman, the court in E/ Escorial includes minimal
discussion regarding the difference between costs of investigation and costs for litigation. (E/
Escorial Owners’ Assn, supra, 154 Cal.App.4th at 1361-1362.) The holding in E/ Escorial,
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DEFENDANT AND INTERVENORS’ REPLY FOR MOTION TO EXCLUDE EXPERT COSTS FOR LITIGATIONGordon & Rees Scully Mansukhani LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
which precedes Gorman, mainly upholds the trial court’s decision to allow expert costs
incurred during litigation where “‘the expert team ... worked very closely together in
formulating recommended scopes of repair.’ (Italics added.)” (/d. at 1362.) The ruling in E/
Escorial rested heavily on the appellate court’s holding that the contractors failed to present
and dispute the basis of the court’s finding as to the recoverable expert costs. (Jbid.) The court
upheld the trial court’s ruling that the requested expert costs were recoverable, because it
found that the contractors had not demonstrated that the trial court could not have inferred that
the plaintiff's experts’ services fell within accepted categories including preparation of repair
recommendations, discovery of construction defects, and investigation of those claims. (Jbid.)
The ruling in Gorman followed El Escorial and provides additional discussion of recoverable
expert costs and the distinction between litigation and investigative costs.
Accordingly, Plaintiff should not be allowed to present evidence of costs that were
incurred for purposes of litigation as opposed to investigation of established violations.
B. The Subject of The Motion is Appropriate for Pre-Trial Determination.
Contrary to Plaintiffs contention, this Motion is not a disguised motion for summary
adjudication. Motions for summary adjudication may only be stated as to particular causes of
action or defenses, unless otherwise provided by stipulation of the parties and order of the court,
and thus this issue was not one that could be presented for summary adjudication. (Code of Civil
Procedure § 437c.) Defendants are not asking the court to dispose of an entire cause of action
as was the case in Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1593, and
R&B Auto Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal.App.4" 327, 333.
This motion pertains to specific evidence that Plaintiff seeks to present at trial, which is
more prejudicial to Defendants than it is probative to Plaintiff's claims, as discussed herein.
(Evid. Code § 352.) Matters pertaining to the evidence Plaintiff seeks to present at trial are
appropriate for a motion in limine. (People v. Morris, supra, 53 Cal. 3d at 188; see also Hyatt,
supra, 79 Cal.App.3d at 337.) “Courts have inherent power, separate from any statutory
authority, to control the litigation before them and to adopt any suitable method of practice, even
if the method is not specified by statute or by the Rules of Court. (Amtower, supra, 158
4.
DEFENDANT AND INTERVENORS’ REPLY FOR MOTION TO EXCLUDE EXPERT COSTS FOR LITIGATIONGordon & Rees Scully Mansukhani LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
Cal.App.4th at 1595.) Evidence of unrecoverable expert costs would serve no purpose but to
confuse the issues, waste unnecessary resources, and cause undue prejudice to Defendants.
Thus, the evidence of expert costs at issue herein are properly the subject of this pre-trial
Motion.
Ill. CONCLUSION
As discussed herein, Defendants request that the Court issue an order to exclude
evidence of Plaintiffs expert costs incurred for litigation purposes and for purposes other than
investigation of established violations and preparation of repair recommendations. Defendants
request that the court further order that it be presumed that costs incurred after service of the
Notices of Claims are not incurred for purposes of investigation of established violations and
thus not recoverable under Civil Code section 944.
Dated: April 8, 2021 GORDON & REES SCULLY MANSUKHANI LLP
By: Sandy M. Kaplan
SANDY M. KAPLAN
ROBIN L. KRUTZSCH
Attorneys for Defendant and Cross-Complainant,
WEBCOR CONSTRUCTION, LP
5.
DEFENDANT AND INTERVENORS’ REPLY FOR MOTION TO EXCLUDE EXPERT COSTS FOR LITIGATIONPROOF OF SERVICE
Axis Homeowners Association v. Almaden Tower Venture, LLC
Santa Clara County Superior Court - Case No.: 17CV314037
Tam a resident of the State of California, over the age of 18 years, and not a party to the
within action. My business address is: Gordon Rees Scully Mansukhani LLP 275 Battery Street,
Suite 2000, San Francisco, CA 94111. On the date indicated below, I served the within
document
JOINT TRIAL MOTION NO. 15
DEFENDANT WEBCOR CONSTRUCTION LP AND INTERVENORS THE
INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA AND LEXINGTON
INSURANCE COMPANY’S REPLY IN SUPPORT OF JOINT MOTION IN LIMINE TO
EXCLUDE PLAINTIFF’S CLAIM FOR EXPERT COSTS RELATING TO
LITIGATION
by ELECTRONIC SERVICE via File&ServeExpress E-service in this action was
completed on all parties listed on the case File&SErveExpres site.
by transmitting via facsimile the document(s) listed above to the fax number(s) set
forth below on this date before 5:00 p.m.
by electronically transmitting the document(s) listed above to the person(s) at the
address(es) set forth below on this date before 5:00 p.m.
by placing the document(s) listed above in a sealed envelope with postage thereon
fully prepaid, in United States mail in the State of California at San Francisco,
addressed as set forth below.
I declare under penalty of perjury under the laws of the State of California that the above
is true and correct.
Executed on April 8, 2021 at San Francisco, California.
Roseann Minato
Roseann Minafo