Expert Fees Under Fees Clause: Fourth District, Division 3 Rules They Are Recoverable Through Routine Costs Procedure

Appellate Panel Disagrees With “Pleading and Proof” Approach in Carwash.

     Many attorney fees clauses have language that allows the prevailing party to recover both attorney’s fees and “witness and expert fees.” Although Code of Civil Procedure section 1033.5 does not permit expert witness fees to be recovered as statutory costs, case law does recognize that sophisticated parties can choose a broader standard via contract so that expert fees can be recovered. (Arnaz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 47 Cal.App.4^th 464, 492 (1996). However, the questions then shifts to how do you procedurally recover them?

     Well, there now is a definitive split of opinion on this particular question.

     In Carwash of America-PO v. Windswept Ventures No. 1, 97 Cal.App.4^th 540, 544 (2002), an appellate panel concluded that such expert witness fees could only be recovered if pled and proven at trial rather than submitted in a cost bill.

      Recently, the Fourth District, Division 3—in a 3-0 opinion authored by Justice Moore—expressly disagreed with Carwash on this point in Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC., Case No. G041414 (4^th Dist., Div. 3 June 21, 2010) (certified for publication).

     The Thrifty Payless panel saw no reason why such expert witness fees should not be recoverable as costs in line with the bargain of the contracting parties (where the contract specifically allows for recovery of expert fees). Issues such as whether the fee amount was incurred or whether it was reasonable could be addressed in a motion to tax costs or an evidentiary hearing (the latter in the trial judge’s discretion).

     Justice Moore and her colleagues were also troubled by the practicalities of requiring proof of expert fees at trial. For example, it seemed “counterproductive, if not slightly absurd, to keep a jury empanelled after nonsuit has been granted [the situation in the facts before it] for the sole purpose of determining the reasonable value of expert witnesses it never heard testify at trial.” (Slip Opn., pp. 19-20.)

     The upshot in Thrify Payless was hardly trivial: the trial court correctly denied a motion to tax costs so that the nonsuit-winning defendant kept an expert witness fee award of $83,340.75—hardly chump change.