CALIFORNIA ATTORNEY'S FEES

Bankruptcy, Costs, Ethics: Ninth Circuit Reiterates That Costs Associated With Attorney Disciplinary Proceedings Are Nondischargeable In A Chapter 7 Case

$61,122.27 Was The Tab.

            In Kassas v. State Bar of California, No. 21-55900 (9^th Cir. Aug. 1, 2022) (published), the Ninth Circuit reiterated that, in line with In re Findley, 593 F.3d 1048 (9th Cir. 2010), the costs associated with a Chapter 7 debtor attorney’s disciplinary proceedings were nondischargeable under § 523(a)(7).

Costs: Challenges To Three Items Of Awarded Routine Costs Were Rejected On Appeal

Electronic Filing Fees, Messenger Costs For Serving Reply Papers, and Private Court Reporter Fees Were At Issue.

            Plaintiff losing her case was hit with a relatively small routine costs award.  On appeal in Koerber v. Encyclopaedia Britannica, Inc., Case No. B312047 (2d Dist., Div. 2 July 13, 2022) (unpublished), plaintiff to no avail challenged three items of the costs award.  In affirming, the 2/2 DCA reasoned in these ways why the costs were proper: (1) electronic filing fees are recoverable under CCP § 1033.5(a)(1); (2) overnight courier or messenger fees for serving a reply brief are discretionarily allowable if reasonably necessary to the litigation (Foothill-De Anza Community College v. Emerich, 158 Cal.App.4^th 11, 30 (2007)), with overnight service of replies being one of the recognized service methods; and (3) private court reporter service expenses are authorized under CCP § 1033.5(a)(11) [not capped as they are for court reporter services provided by the court under the Government Code], with $425 not being a patently unreasonable charge. 

Costs: Plaintiff Unsuccessfully Appeals Postjudgment Costs Order Awarding $3,451.11 To Prevailing Defendants Arguing That His Deposition Testimony Should Have Been Precluded And Therefore Was Not A Recoverable Cost

Plaintiff’s Challenge To The Costs Order Was Precluded As It Ultimately Attacked A Prejudgment Order That Plaintiff Did Not Appeal And Did Not Challenge In Appeal Of The Judgment And Underlying Summary Judgment Ruling.

            In Lopez v. Irvine Company LLC, Case No. G059354 (4^th Dist., Div. 3 July 1, 2022) (unpublished), defendants defeated plaintiff’s housing discrimination claims through a summary judgment motion.  Afterward, the trial court awarded defendants $3,451.11 out of the requested $4,463.01 in costs, which included $1,956.95 in costs associated with plaintiff’s deposition.  Plaintiff argued on appeal that his deposition testimony should have been precluded due to defendants’ failure to disclose that the company providing the deposition services was a tenant in a building owned by one of the defendants, and that this affiliation created a “hostile environment” for his deposition.  Because his deposition testimony should have been precluded, plaintiff contended, the trial court erred in awarding defendant costs related to his deposition.

            In a 3-0 opinion authored by Acting Presiding Justice Goethals, the 4/3 DCA affirmed.  Prior to judgment, the trial court denied plaintiff’s motion to have his deposition testimony suppressed and for $10,000 in sanctions to be imposed based on the same failure to disclose the affiliation argument.  Because plaintiff did not appeal that prejudgment order, nor did he claim that the trial court erred with regard to that order when he appealed the judgment and underlying summary judgment ruling, he was precluded from making that argument with regard to the costs award.  To allow plaintiff to re-raise the same argument in challenging the costs award “‘“would have the effect of allowing two appeals from the same ruling.”’” (Hersey v. Vopava, 38 Cal.App.5th 792, 797-798 (2019).)

Civil Rights, Costs: Costs Relating To Non-FEHA Claims Affirmed, But Remand To Determine If Some Costs Were Justified Because FEHA Claim Was Frivolous

Lack Of Trial Court Findings Required A Limited Remand On Possible FEHA Costs.

            In a FEHA/non-FEHA mixed case, routine costs that true non-FEHA claim costs are recoverable but that overlapping FEHA/non-FEHA claim costs which cannot be apportioned can only be recovered if the FEHA claim was frivolous.  (Roman v. BRE Properties, Inc. (2015) 237 Cal.App.4^th 1040, 1059.)

            Roman helped decide what costs were and were not recoverable in Williams v. Simpson Strong-Tie Company, Inc., Case No. A162992 (1^st Dist., Div. 5 June 28, 2022) (unpublished).  Plaintiff lost a mixed FEHA/non-FEHA case, but he appealed a $46,227.63 cost award to defendant.  Because many of the costs were non-FEHA related based on the juncture of the case or were not challenged, $33,728.99 in costs were sustained.  As to the remaining $12,498.64 in costs incurred when both FEHA and non-FEHA claims were at issue, the matter was remanded for further proceedings because the lower court failed to determine if the FEHA case was frivolous or whether the costs were allocable. 

Costs: Where Successor Trustee Had To Join Parties Ultimately Dismissed To Obtain Possession Of Premises, Routine Costs Were Properly Awarded To Trustee For Activities Relating To the Dismissed Defendants

Prevailing Party Determination Is Pragmatic On Costs Awards As Well.

            Successor trustee in Sutherland v. Arent, Case No. A161411 (1^st Dist., Div. 1 June 14, 2022) (unpublished) was awarded costs after she finally obtained possession to a rental cabin by including dismissed defendants, with the dismissed defendants relinquishing possession to the trustee.  The primary defendants argued that they should not be saddled with routine costs relating to activities associated with the dismissed defendants.  The appellate court disagreed, holding that costs associated with a dismissed defendant are recoverable against remaining defendants where the remaining defendants’ actions made it necessary to add the dismissed defendants as parties.  (Transamerica Title Ins. Co. v. Green (1970) 11 Cal.App.3d 693, 704; Davis v. Wilde (1961) 197 Cal.App.2d 855, 857.)

Costs: 9th Cir. Reverses FRCP 41(d) Fees As Costs Award For No Statutory Entitlement and No Allegations/Proof Of Bad Faith – Determining Fees Are Not Automatically Costs, But Majority Refuses To Determine If Allowed For Bad Faith/Forum Shopping

Partially Concurring/Dissenting Justice Would Vacate Costs Award And Remand To Determine If Bad Faith Existed, Wanting Ninth Circuit To Join Sister Circuits Finding That Bad Faith Can Be A Predicate For A Fees As Costs Award.

            Moskowitz v. American Savings Bank, F.S.B., No. 20-15024 (9^th Cir. June 10, 2022) (published) involved an interesting “attorney’s fees as costs” issue which drew a split decision.

            The plaintiff in a Telephone Consumer Protection Act case (which has no statutory basis for fees to a prevailing party) lost on a successful summary judgment motion by the defense after voluntarily dismissing a previous case against defendant in Connecticut (the dismissal being without prejudice and without costs).  The Ninth Circuit affirmed the summary judgment grant.  Defendant moved for routine costs and then attorney’s fees as additional costs under Federal Rules of Civil Procedure, rule 41(d), which were awarded by the district judge.  The Ninth Circuit majority, in a decision authored by Circuit Judge Bea, affirmed the routine costs award but reversed the “fees as costs” award.  Circuit Judge Wardlaw, in partial concurrence and in partial dissent, would have vacated and remanded the “fees as costs” award rather than reverse it outright.

            The Ninth Circuit, across the board, agreed that attorney’s fees are not automatically costs; rather, there must be a statutory basis for fees (none existed under the TCPA) or there must be allegations/proof of bad faith conduct, including forum shopping.  The majority found that bad faith was neither alleged nor proven, such that a reversal of the “fees as costs” award should occur.  In dissent, Circuit Judge Wardlaw would have vacated the “fees as costs” award and remanded to determine if there was bad faith, writing that the Ninth Circuit should join sister circuits to reach consensus that rule 41(d) did allow fees as costs where bad faith was shown. 

Costs, Laffey Matrix, Reasonableness Of Fees: Losing Defendants/Cross-Complainants Properly Saddled With RFA Proof Of Sanctions Fees And Routine Costs

Prevailing Parties Requested $393,945.30 In Fees, But Only Awarded $38,920.14—A Win, But Adverse Party Still Unsuccessfully Appealed.

            The next case, Duncombe v. Barfresh Food Group, Inc., Case No. B308385 (2d Dist., Div. 2 May 31, 2022) (unpublished), demonstrates an important lesson:  where you obtain a significantly diminished fee award at the trial court level, you need to think long and hard on whether to appeal.

            In this one, plaintiff/cross-defendant won a jury verdict as far as obtaining consulting fees under a contract with the other side relating to consulting services in Australia.  That verdict was $43,962.56, with nothing recovered on the defense’s cross claims.  Based on some denial of RFAS ultimately proven at trial, the defense moved for attorney’s fees of $393,945.30 under the RFA costs-of-proof sanctions provision.  They also sought some routine costs of $9,000, with the non-prevailing party not filing a motion to tax costs.  In the end, the trial judge awarded $38,920.14 in costs-of-proof sanctions fees and the entirety of the requested costs.  The adverse party did appeal despite the diminished fee award.

            The appellate court affirmed.  The RFAs denied were material, such that the inquiry focused on the reasonableness of the fees.  The trial judge had a lot of discretion in this area given her involvement of the case.  The side asking for fees utilized the D.C. Laffey Matrix to support the requested hourly rates, a matrix which is an acceptable one to use within the discretion of the lower court.  As far as the costs award, the adverse party never filed a motion to tax costs such that the challenge was waived.

Costs, Employment: $17,274.23 Costs To Prevailing Defendant In FEHA Case Affirmed Because Plaintiff’s Case Was Frivolous

Rosenman Written Finding Requirement Did Not Apply To Statutory Costs Award, With 2/1 DCA Articulating A Split In Thinking On The Written Requirement Dictate of Rosenman.

            In Schoensiegel v. Abbott Laboratories, Inc., Case Nos. B312628/B314633 (2d Dist., Div. 1 May 24, 2022) (unpublished), plaintiff lost her FEHA action based on a successful summary judgment motion, with the trial court awarding the defense $17,274.23 in statutory costs based on the perception that plaintiff’s case was frivolous.  (If a case is deemed frivolous, this is a ground upon which to award costs to a prevailing FEHA defendant.)

            On appeal, plaintiff principally argued that the lower court failed to issue written predicate findings before awarding costs as required by Rosenman v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, 91 Cal.App.4^th 859, 868 (2001).  The 2/1 DCA held that the Rosenman requirement only applied to attorney’s fees, not statutory costs.  Further, it did note that Rosenman was disagreed with by Robert v. Stanford University, 224 Cal.App.4^th 67, 72 (2014), which found that the failure to issue findings should not give rise to an automatic reversal in the absence of prejudice.  The 2/1 DCA panel did not take a position on this difference in appellate thinking, but its overall reasoning seems to suggest it liked the conclusion reached in Robert. 

Costs, Prevailing Party, Section 1717, Section 998: Fifth District Deals With Various Prevailing Party Issues For Costs And Fees Award To Litigants Who Both Claimed To Have Prevailed

Plaintiff Winning Some Money Entitled To Routine Costs, But Defense Entitled To Prevailing Party Fees And Some Other Routine Costs Relating To Fee And Expert Witness Work, Some Other CCP § 998.

            Mike Murphy’s Enterprises, Inc. v. Fineline Industries, Inc., Case No. F080503 (5^th Dist. Apr. 13, 2022) (unpublished) is a good opinion to show the logical analysis of determining routine costs and fees awards where there is a mixed result and a CCP § 998 offer is involved.  Here is what the appellate court developed as the analytical framework:  (1) a court determines the prevailing party for a purpose of routine costs under CCP § 1032, with the prevailing party for 1032 purposes obtaining at least its preoffer costs; (2) if a party qualifies as a prevailing party under § 1032, the court turns to whether the prevailing party’s net monetary recovery exceeds any qualifying but rejected § 998 offer (which entails taking the amount awarded and adding preoffer interest and any properly requested costs), with costs including attorney’s fees if allowed by statute or contract); (3) in conjunction with the 998 analysis, the court must determine if the plaintiff is the prevailing party under section 1717 such that those preoffer fees may be included in the 998 net recovery analysis; (4) the court then considers the contractual provisions, the effect of section 1717 on the fees provisions, and finally the effect of the rejected 998 settlement offer such that if the net recovery is greater, the plaintiff is the prevailing party for the whole case or if the net recovery is lower, defendant will be treated as the prevailing party at all times after the settlement was made.

            In the actual case, plaintiff lost many of his contractual theories to defendant, but did win about $63,000 on his contractual claim.  Earlier in the case, defendant sent a 998 offer for $85,000 which was not accepted.  Eventually, the lower court determined defendant was the prevailing party for both fees and costs, especially under 998, awarding it about $564,300 in fees, costs, and expert witness fees—when offset against the $63,000 award to plaintiff, defendant had a favorable judgment of $501,284.95.  Plaintiff appealed.

            The Fifth District affirmed most of the trial judge’s awards, except for a routine costs award denial to plaintiff and except for taxing some of defendant’s routine costs a little.  Plaintiff was the prevailing 1032 party because it did receive positive money, such that it was entitled to its preoffer costs.  However, the trial judge was correct in determining that plaintiff properly excluded preoffer fees because he did determine that defendant was the prevailing party on the contract under section 1717, not plaintiff, in a mixed-results case—meaning that plaintiff did not have the net recovery for purposes of preoffer fees or postoffer costs.  Then, because defendant was entitled to fees and costs as prevailing party under both sections 1717 and CCP § 998, the appellate court only disagreed with the trial judge in minor respects, finding these costs were not recoverable: (1) past discovery sanctions; (2) filing costs in a separate federal action (which cannot be deemed costs awarded to a prevailing state court party); and (3) some County of Tulare production fees.  It did find that items such as CourtCall expenses and pro hac vice costs were proper.  In the end, it remanded to award plaintiff preoffer costs and to strike some defense costs items, but otherwise enter judgment pretty close to what occurred before the trial judge.

Costs, Deadlines, Requests For Admission, Section 998: 2/8 DCA Affirms Denial Of Costs Of Proof Sanctions And Untimely Fee Request, Sustains Some Costs Despite A Costs Memo Verification, And Reversed Expert Fee Award Based On Invalidity Of 998 Offer

Panoply Of Issues Addressed In This One.

            In Bogdan v. Polak, Case Nos. B306264/B309780 (2d Dist., Div. 8 Apr. 6, 2022) (unpublished), landlord won a gnarly retaliatory eviction lawsuit against tenant based on some nonsuits and an eventual jury trial.  In postjudgment proceedings, the lower court denied landlord’s attorney’s fees request as untimely, awarded some routine costs even though landlord failed to verify the costs memorandum, awarded expert witness fees under a CCP § 998 offer to landlord, and refused a costs-of-proof sanctions request for RFA denials.

            Everything was affirmed by the appellate court, except for a reversal of the expert witness award.

            Landlord’s fee motion was untimely; despite landlord’s argument that more time was allowed based on specific emergency orders during the pandemic, the appellate court found that those orders only allowed for “grace” if the litigant had difficulty filing documents, which it did on other items during the COVID-19 crisis.  The denial of tenant’s motion to tax costs was correct because attaching a costs memorandum verification is not jurisdictional and landlord substantially complied with the requirements.   However, the expert witness costs award was overturned because the CCP § 998 offer conditioned entry of any judgment on the offering party giving additional authority for the entry, which made the offer conditional and invalid.  Finally, no costs-of-proof sanctions could be awarded because the requesting party provided a table of RFAs, answers, and trial proof, but—alas!—did not provide the record citations to support the argument.

Costs: Trial Court’s Judgment Vacating Costs Awarded Against Gambling Licensee By The California Gambling Control Commission And Authorizing Remand To Administrative Law Judge Affirmed On Appeal

The Commission Awarded Costs To The Bureau Of Gambling Control After Concluding ALJ’s Denial Of Costs Was Based On Misinterpretation Of The Law Governing Costs Awards, But Should Have Remanded The Issue To The ALJ, And Nothing In Bus. & Prof. Code § 19930(d)(1) Prevented Trial Court From Vacating The Award And Remanding To The Commission With Leave For It To Remand The Issue To The ALJ.

Gambling Room, Looking East – Town of Locke, Dai Loy Gambling Museum, 13951 Main Street, Locke, Sacramento County, CA. Jet Lowe, Creator. 1984. Library of Congress.

            The Department of Justice, through its Bureau of Gambling Control, investigates gambling license applicants, monitors the conduct of licensees, and initiates and prosecutes disciplinary actions against licensees accused of committing violations of the Gambling Control Act (Bus. & Prof. Code, div. 8, ch. 5; § 19800).  One such licensee saw his gambling license revoked/not renewed by the California Gambling Control Commission following a hearing before an administrative law judge (ALJ) where licensee was found to have committed 21.5 violations (and for those who are curious – no, there is no explanation for how a half-violation could be committed).  Additionally, the Commission hit licensee with a monetary penalty of $13,672,000 and costs of $127,880. 

            Licensee challenged the Commission’s decision through a petition for a writ of mandate before the trial court – achieving partial success with the trial court’s determination that the Commission may have relied on unproven misconduct in reaching its decision, and by having the penalty and costs vacated for exceeding the amount supported by law and remanded for redetermination based on the trial court’s conclusion that the monetary penalty exceeded the amount supported by law and that the costs could only be assessed by the ALJ on remand from the Commission.  This led to an appeal by both the licensee and the Commission in Swallow v. Cal. Gambling Control Com., Case No. C089329 (Third Dist., April 4, 2022) (unpublished).

            The Third District affirmed the trial court’s judgment with exception to the monetary penalty – although finding that the penalty was not supported by law, analyzing the issue differently than the trial court and ordering the Commission to reconsider the penalty in line with the appellate panel’s opinion.  However, we focus on the costs issue, which the licensee unsuccessfully argued on appeal had been improperly remanded for further proceedings.

            The Bureau of Gambling Control’s request for an award of costs under § 19930(d) was denied by the ALJ because the Bureau submitted its proof of costs after the conclusion of, rather than during, the hearing on the charges against licensee.  Based on its determination that the ALJ made an error of law, the Commission awarded costs to the Bureau – which the trial court reversed and remanded to the Commission with leave for it to remand the case back to the ALJ.  On appeal, licensee did not address ALJ’s mistake, but argued that the trial court’s remand violated § 19930(d)(1).  The Third District – finding licensee’s argument to be without merit – agreed with the trial court that § 19930(d)(1) does not prohibit such remand to the ALJ for reconsideration of the Bureau’s costs request under a proper interpretation of § 19930(d), and affirmed.

Costs: 4/1 DCA, In A Majority Decision, Affirms That Deposition Costs Taken In Another Related Case, Not The Case Where Costs Are Claimed, Cannot Be Claimed As Costs

Dissent Found That Stipulation By The Parties To Use In Another Case Where Both Cases Were Pending Should Have Allowed Costs Recovery In The Case Where Costs Were Claimed.

            In Anderson v. Way West, Inc., Case No. D077648 (4^th Dist., Div. 1 March 14, 2022) (unpublished), majority and dissenting opinions came to different conclusions on whether deposition costs incurred in another case were recoverable in a second case where the parties stipulated that the deposition could be used in the second case. 

            Relying on In re Bauer’s Estate, 59 Cal.App.2d 161, 163, the majority determined that a “bright line” rule was preferable by which the deposition costs in a prior case should not be allowable in costs in another matter, whether concluded or still pending, and notwithstanding any stipulation to allow use of the deposition in another matter.

            The dissent saw things differently.  Based on a distinction in Bauer’s that the prior case had actually concluded, the dissent would fashion this rule:  (1) when the parties agree after a case concludes that a previously taken deposition can be used in another proceeding, that agreement does not change the fact that the costs of the deposition were incurred in the first action alone (so no costs could be imposed); and (2) when the parties agree before taking a deposition that it will serve as discovery in two or more pending cases, the costs of that deposition are incurred in each of those actions (costs can be imposed). 

Consumer Statutes, Costs: Recovery Of $133,239.75 In Attorney Fees, Pre-Judgment Interest And Costs Affirmed For Song-Beverly Plaintiff Who Had Paid Only $6,204.68 Under A Consumer Credit Contract.

2/8 DCA Agreed With Pulliam That The Holder Rule Cap Does Not Preclude Recovery Of Attorney Fees And Further Determines That The Cap Does Not Preclude Recovery Of Costs, Nonstatutory Costs, Or Prejudgment Interest.

            In Melendez v. Westlake Services, LLC, Case No. B306976 (2d Dist., Div. 8 January 28, 2022) (published), plaintiff who purchased a car through a retail installment contract sued the seller and holder of the contract for violations of CLRA, the Song-Beverly Consumer Warranty Act (California’s lemon law, Civ. Code, § 1790 et seq.), Civil Code § 1632 (requiring translation of contracts negotiated primarily in Spanish), and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), along with fraud and negligent misrepresentation claims. Through a settlement agreement, plaintiff ultimately recovered the $6,204.68 he had paid under the retail installment contract, with the remaining contract balance waived.  Additionally, pursuant to the terms of the agreement, plaintiff moved for and was awarded recovery of $115,987.50 in attorney fees, $2,956.62 in prejudgment interest, and $14,295.63 in costs.

            Defendant appealed and argued that the Federal Trade Commission’s Holder Rule – promulgated in 1975 as a consumer protection measure by which the holder of a consumer credit contract is subject to all claims the debtor could assert against the seller of goods/services obtained under the contract – limits the debtor’s recovery from the holder to the amount paid by the debtor under the contract. The 2/8 DCA disagreed.

            In affirming the trial court’s fees award, the panel followed the conclusions set forth in Pulliam v. HNL Automotive Inc., 60 Cal.App.5^th 396 (2021) [discussed in our February 02, 2021 post] – that the Holder-Rule limitation on recovery does not apply to attorney fees, and that the FTC’s contrary interpretation is not entitled to deference.  The panel also affirmed the trial court’s prejudgment interest and costs award to plaintiff – applying Pulliam’s fee recovery rationale, along with the conclusions set forth in Lafferty v. Wells Fargo Bank, N.A., 25 Cal.App.5^th 398 (2018) [discussed in our July 20, 2018 and June 11, 2020 posts] as to prejudgment interest and costs – though disagreeing with Lafferty’s conclusion on fee recovery.

Costs: California Supreme Court Decides That Unused Trial Exhibit Copies And Demonstrative Aids Can Be Awarded As Routine Costs In The Discretion Of The Lower Court

No Categorical Grant On This Costs Category, But Discretionary Call For Lower Court.

            In Segal v. ASICS America Corp., Case No. S263569 (Cal. Supreme Court Jan. 13, 2022) (published), the California Supreme Court confronted a split on appellate thinking on whether trial exhibit photocopies and demonstrative aids, not used during the trial, can be awarded as routine costs under Code of Civil Procedure section 1033.5.  Although determining that these costs are not categorically recoverable under section 1033.5(a)(13) (because the unused materials were not helpful to the trier of fact because they were never presented before the trier of fact), they were not expressly prohibited under section 1033.5(b).  However, that did mean that they could be discretionarily recovered as costs under section 1033.5(c)(4) if they are determined by the lower court to be reasonably necessary to the litigation.  Our high state court also indicated that the same discretionary rule would apply to exhibits or materials found to be inadmissible at the trial level.  Again, a trial judge’s discretion will be key on the recovery of these types of claimed costs.   The opinion was authored by Chief Justice Cantil-Sakauye.

Costs: Fifth District Discusses A Myriad Of Costs Issues, Agreeing That Some Were Improperly Awarded But Others Were Properly Awarded

Costs Necessary And Reasonable To The Litigation Are Discretionary Award Calls By The Trial Judge.

            In O’Neal v. Stanislaus County Employees’ Retirement Assn., Case No. F079887 (5^th Dist. Dec. 8, 2021) (unpublished), non-prevailing plaintiffs appealed certain costs awarded to The Retirement Association and Stanislaus County.  The Fifth District concluded that some costs were improperly awarded but others were properly ordered, with the major takeaways being these:  (1) summary judgment exhibit costs and costs of a person never deposed were not properly awarded; (2) copies of trial exhibits is a discretionary costs award such that there was no abuse of discretion in so awarding; (3) messenger fees for filings by outside, non-local counsel are a discretionary costs item which can be awarded by the trial judge; (4) UPS shipping costs are not allowable under the costs statutes; (5) CourtCall telephonic appearance expenses can be awarded in the trial judge’s discretion; (6) unused trial exhibit expenses are properly awardable discretionary costs, although noting that the issue is pending before the California Supreme Court in Segal v. ASICS America Corp., No. S263569; and (7) transcript costs for transcripts not ordered by the court are not a proper costs item.

            BLOG UPDATE:  Segal was argued and submitted on November 3, 2021, so a decision should be upcoming in the near future.

Costs: Court Transcripts, Electronic Presentations, Arbitration Transcripts, and Trial Support Vendor Fee Items Considered In Discussion Of Properly Awarded Routine Costs

Only One Item Out Of The List Was Improperly Awarded.

            The general rules for awarding routine costs to a prevailing party can be distilled down this way:  some are expressly allowable; some are expressly not allowable; and if costs are not mentioned in the first two categories, they are awardable in the courts discretion if found reasonable and necessary to the conduct of the litigation.  (Code Civ. Proc., § 1033.5(a), (b), (c)(4).)  The appellate court in Engel & Engel, LLP v. Shuck, Case Nos. B297421/B300755 (2d Dist., Div. 2 Nov. 4, 2021) (unpublished) affirmed a lower court’s award of three items of costs, but reversed one costs award as being improper.  Here are the results:  (1) trial transcripts were improperly awarded because they are not recoverable unless “court ordered” (which they were not) and are distinct from allowable court reporter fees; (2) electronic presentation expenses were proper because the lower court expressly found they were helpful; (3) arbitration transcripts were allowable because only court transcripts are expressly disallowed unless court ordered; and (4) a trial support vendor’s fee was proper because it was subsumed in the electronic presentation component. 

Costs: 2/2 DCA Refuses To Carve Out Costs Exception For Prevailing Defendant In Knox-Keene Act Cases

Costs Determination Remanded To Address Specific Objections To Claimed Costs By Kaiser.

            In Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc., Case Nos. B304183/ B306322 (2d Dist., Div. 2 Nov. 4, 2021 partially published; costs discussion unpublished), Kaiser was the prevailing defendant for costs because no relief was obtained against it and it obtained no relief in a Knox-Keene Act emergency medical services case.  The appellate court found that it was error for the lower court to deny costs.  The other side argued that the appellate court should fashion an exception for cases under the Act, but the court refused on the ground that it is “not our role to rewrite statutes [inclusive of the general costs statutes].”  The matter was remanded to consider opponents’ objections to specific items.

Costs, Experts, Section 998: Trial Court’s Costs Award To Prevailing Plaintiffs, Which Accounted For Costs From Two Trials Where First Trial Resulted In Mistrial Due To Plaintiffs’ Counsel, Affirmed On Appeal

Trial Court’s Order Awarding Costs Did Not Operate As An Improper Reconsideration Of A Previous Order, And Defendants Failed To Support With Any Authority Their Contention That Plaintiffs Could Not Recover Fees Where Their Attorney Caused Mistrial.

            In Esparza v. Win Distribution, Case No. E072880 (4^th Dist., Div. 2 October 25, 2021) (unpublished), the 4/2 DCA analyzed whether a party whose counsel’s conduct resulted in a mistrial but prevailed at a second trial can recover costs from both trials.

            A family of four personal injury plaintiffs prevailed in a second jury trial following a mistrial of the first.  Afterward, the trial court awarded plaintiffs $188,057.53 in ordinary costs which accounted for both trials after partially granting defendants’ motion to tax.  Because plaintiff husband’s portion of the award exceeded the $10 million Code Civ. Proc., § 998 offer of compromise he made to defendants, the trial court also awarded him $366,976.42 in expert witness fees plus prejudgment and postjudgment interest exceeding $2 million.

            Defendants, a commercial truck driver and his employer, appealed the judgment and argued, alternatively, that their motion to tax costs from the first trial had been improperly denied and resulted in an improper award of expert fees and prejudgment interest to plaintiffs. Relying on Mullin v. Rousseau, 112 Cal.App. 719 (1931), argued that plaintiffs could not be awarded costs for both the first and second trial when their own attorney’s closing argument prompted the mistrial. 

            The 4/2 DCA disagreed and affirmed the judgment, including the costs award.  Although Mullin also involved the plaintiff prevailing at a second trial after plaintiff’s counsel caused a mistrial in the first trial, costs for both trials being awarded to plaintiff, and defendant’s motion to tax costs from the first trial being denied – Mullin is inapposite. In Mullin, the trial court charged the costs of the first trial to plaintiff as a penalty for the attorney’s misconduct. When the trial court subsequently awarded plaintiff with those same costs from the first trial, that award operated as an order reconsidering the prior costs award – which was improper.  Here, the trial court denied defendants’ request for the attorney fees and costs of the first trial as Code Civ. Proc., § 128.5 sanctions – finding plaintiff’s counsel’s made an honest mistake during closing arguments which did not warrant the imposition of sanctions. Therefore, the trial court’s order was not improper as it did not operate as a reconsideration of a previous order.  Additionally, defendants failed to support their contention with any authority.

Appealability, Costs, Deadlines: $10,800 Costs Recovery To Certain Defendants After Plaintiff Dismissed Case Without Prejudice And Refiled In Texas Was Not Erroneous

4/3 DCA Sides With The View That A Costs Award Entered After A Voluntary, Without Prejudice Dismissal Is Appealable.

            In Thomas v. St. Joseph Health System, Case No. G059408 (4^th Dist., Div. 3 Oct. 20, 2021) (unpublished), plaintiff doctor sued certain health care defendants in Orange County Superior Court for interference/unfair competition.  Certain defendants gained a tentative ruling by which a motion to quash based on lack of personal jurisdiction was going to be set for a final hearing, based on the notion that the case belonged in Texas.  (The lower court had allowed plaintiff to take jurisdictional-directed depositions in both California and Texas in order to oppose the motions to quash.)  Before that hearing could be held, plaintiff filed a voluntary, without prejudice dismissal and later refiled the case in Texas.  Defendants filed a costs memorandum, with the trial judge awarding $10,800 to defendants and denying a motion to strike/tax costs.  Plaintiff appealed.  The costs order was affirmed, in a 3-0 opinion authored by Orange County Superior Court Judge Linda Marks, sitting by assignment.

            In a footnote, the 4/3 DCA panel observed that there is a split in authority on whether a costs order entered after a voluntary dismissal without prejudice is an appealable order.  (Compare Gassner v. Stasa, 30 Cal.App.5^th 346, 351-355 (2018) [is] with Monn Chong Loong Trading Corp. v. Superior Court, 218 Cal.App.4^th 87, 92 (2013) [isn’t, but can be treated as a discretionary petition for writ of mandate].)  The panel sided with Gassner, but also indicated it would have reviewed it under the mandate petition alternative.

            Plaintiff argued that defendants filed the costs memorandum 9 days too late based on the 15-day deadline, but that failed because no notice of entry of dismissal was served such that the longer 180-day rule applied.

            Next, plaintiff contended that the pendency of the case in Texas meant that there was no prevailing party for costs purposes.  Not so, said the appellate court.  CCP § 1032(a)(4) allows costs to “a defendant in whose favor a dismissal is entered,” with a dictionary definition of “in favor of” supporting the position that defendants had prevailed notwithstanding the pendency of the Texas action.  (The analysis likely would have been different if attorney’s fees were involved, but the result was different for costs.)

            Plaintiff then suggested that defendant needed to file the customary Costs Worksheet, but the appellate court observed that the only initial required pleading is the costs memorandum itself (CRC, rule 3.1700(a)(1)), although it is a good idea to file the Worksheet.

            The amount of costs, mainly for in-state and Texas travel deposition expenses by counsel, were reasonable, with the fact that plaintiff’s counsel’s travel costs were $450 less not altering the result—costs do not have to be the lowest possible for purposes of reasonableness.  (Landwatch San Luis Obispo County v. Cambria Community Services Dist., 25 Cal.App.5^th 638, 646 (2018).)

Costs, Section 998, Special Fee Shifting Statutes: No Abuse Of Discretion In Attorney Fees And Costs Award Of $1,454,938.70 Against One Of Three Defendants, Without Apportionment, In Wrongful Death Case

Apportionment Of Attorney Fees Was Not Feasible As Plaintiffs’ Efforts Against The Defendants Were Inextricably Intertwined,  And The Case Could Not Have Been Presented Without Significant Expert Testimony To Determine Who Was Legally Responsible.

            In Hatcher v. Powell, Case No. B302730 (2d Dist., Div. 6 September 27, 2021) (unpublished), four defendants were sued in a consolidated wrongful death action following a single-car accident in Ventura County.  One of the defendants was the driver of the car, who lost control while attempting a left curve on a country road at almost twice the posted speed limit, in the dark of night, and with a blood alcohol level of .19 percent according to his blood test.  The other three defendants were a communications company, the construction company it had hired, and Ventura County.  Driver had hit construction equipment stored off the shoulder of the road when he lost control – killing two of his three passengers and injuring the third.   County settled out of the case, but the remaining defendants proceeded to trial where the jury returned a unanimous special verdict finding driver’s negligence was a substantial factor, but the negligence of communications and construction companies was not a substantial factor, in causing harm to the plaintiffs.  All told, according to our calculations, the jury awarded non-economic damages against driver of roughly $7.75 million and $455,000 in economic damages.  $1.9 million of that was awarded to the parents of one of the deceased passengers – parents who had made driver an unaccepted Code Civ. Proc. § 998 offer to settle for $500,000 each.

            Those parents then moved post-judgment for costs of $1,458,588.72, which included $544,493.80 in prejudgment interest, pursuant to Civ. Code § 3291 and Code Civ. Proc. § 998 (prejudgment interest running from the date of § 998 offer not accepted by defendant), and $760,000 in attorney’s fees pursuant to Code Civ. Proc. § 1021.4 (a fee-shifting statute allowing trial courts to award reasonable attorney fees to a prevailing plaintiff where the action for damages is based upon defendant’s commission of a felony offense for which that defendant has been convicted).  After minor deductions to the jury fees and for expert fees incurred prior to the § 998 offer, the trial court awarded $1,454,938.70 in fees and costs against driver.

            Although not denying liability, driver appealed – claiming the trial court abused its discretion in the amount of its award of attorney’s fees and costs – and argued communications and construction companies bore some responsibility.  However, the 2/6 DCA agreed with the trial court’s conclusions.  It was not feasible to apportion fees amongst the defendants because plaintiffs’ efforts against the defendants were inextricably intertwined, and the case could not have been presented without significant expert testimony to determine who was legally responsible.  The trial court had properly considered the time spent, reasonable hourly rates, complexity of the issues, success achieved, and skill of the attorneys in awarding fees and costs that were proportionate to the judgment obtained. (Serrano v. Priest, 20 Cal.3d 25, 48- 49 (1977); Harman v. City and County of San Francisco, 158 Cal.App.4th 407, 419 (2007).)

Common Fund, Costs: Trope Limitation Prevents Self-Represented Attorney From Obtaining Fees Under Common Fund Theory, But Routine Costs Are Awardable

The 2/6 DCA, in a scholarly opinion written by Justice Yegan, faced the questions of whether a self-represented attorney, who was also the winning party, could seek recovery of attorney’s fees and costs under the nonstatutory common fund theory.  Different answers were the conclusions on the two issues.

            In Leiper v. Gallegos, Case No. B309986 (2d Dist., Div. 6 Sept. 23, 2021) (published), the appellate court agreed with the trial court that the self-represented attorney, under the Trope limitation (although it was an open issue), could not recover almost $96,000 in requested fees in a common fund case.  The reviewing court followed the holding of Bruno v. Bell, 91 Cal.App.3d 776, 783 (1990) to reach the result on fees with respect to pro se attorneys.    However, with respect to costs of around $3,000 (excluding attorney’s fees), the 2/6 DCA panel found no convincing reason why they could not be awarded given a pro se attorney could obtain costs under the routine costs CCP provisions. 

Costs: No Oral Hearing Required On Appellate Costs Motion

Nice Dissection Of Appellate Routine Costs, Which Were Allowed.

            No reason for us to discuss in detail the case of Pacheco v. Tuttle, Case No. B302508 (2d Dist., Div. 3 Sept. 22, 2021) (unpublished), unless trial and appellate practitioners want to dive in the weeds, given that an appellate costs award of $1,627 was at issue—we kid you not!

            The post-worthy takeaways are these:  (1) no hearing is required on a motion to tax costs (different with respect to a pretrial attachment or summary judgment motion); (2) defendant bears the burden of showing a costs item was unreasonable after plaintiff provided a verified costs memorandum which is prima facie evidence on the issue; and (3) nothing showed that a governmental entity was limited to a 15 cent per page charge for printing/copying appellate briefs. 

Costs, Prevailing Party: Where Neither A Plaintiff Nor A Cross-Complainant Obtains Any Relief, Defendant Is The Prevailing Party For Costs, Absent A Costs Waiver

May Sound Quirky, But It Is The Law!

            In Bernstein v. Sebring, Case No. C088375 (3d Dist. Sept. 21, 2021) (unpublished), plaintiff/cross-defendant and defendant/cross-complainant partially settled some claims (where costs were waived) but proceeded to trial on some remaining claims.  The trial judge ultimately dismissed plaintiff’s complaint, and defendant voluntarily dismissed his remaining cross-claim.  The trial judge decided plaintiff, as a cross-defendant, was the prevailing party entitled to routine costs.  The Third District reversed.  Because neither party obtained any relief, the defendant was the prevailing party, with plaintiff as a cross-defendant not counting in the prevailing party analysis.  (McLarand, Vasequez & Partners, Inc. v. Downey Savings & Loan Assn., 231 Cal.App.3d 1450, 1454-1455 (1991).)  So, in a reversal of fortune, defendant was the prevailing party entitled to costs.  (Building Maintenance Service Co. v. AIL Systems, Inc., 55 Cal.App.4^th 1014, 1025 (1997).) 

Costs, Deadlines, Experts, Section 998: 4/2 DCA Dismisses Defendants’ Cross-Appeal Of Trial Court’s Order Granting Plaintiff’s Motion To Tax Majority Of $139,951.97 In Costs And Fees Sought By Defendants Under § 998

Defendants’ Cross-Appeal Was Untimely, And A Separate Appeal, Not A Cross-Appeal, Was Required For Challenging Trial Court’s Order As It Related To Defendants’ Request For Expert Witness Fees.

            In Ramirez v. Barajas, Case No. E071558 (4^th Dist., Div. 2 September 13, 2021) (unpublished), personal injury plaintiff, suing defendants for $1.4 million in damages, rejected defendants’ Code Civ. Proc., § 998 settlement offer of $350,000.  After plaintiff failed to beat that offer at trial (being awarded only $58,311.77, a result plaintiff appealed), defendants moved, under § 998, for costs and fees of $139,951.97 – which included $111,74.88 in expert witness fees.  However, because the trial court found defendants’ request to be deficient in that it failed to identify the date costs were incurred – whether pre or post-offer – it granted in its entirety plaintiff’s motion to tax and awarded defendants only $9,284.39 in ordinary litigation costs. 

            Defendants cross-appealed, but the 4/2 DCA dismissed their cross-appeal due to lack of jurisdiction. 

            First, defendants’ cross-appeal was untimely.  Under California Rules of Court, Rule 8.108(g), the deadline for the filing of defendants’ cross-appeal was within 20 days of the superior court serving them with notice of plaintiff’s appeal.  Defendants filed their notice of cross-appeal 21 days too late.

            Second, plaintiff’s notice of appeal from the judgment did not create appellate jurisdiction over the trial court’s ruling on defendants’ request for expert witness fees under § 998 – which accounted for the majority of fees sought by defendants.  A cross-appeal may challenge only the same judgment challenged by the underlying appeal, and “[a]n award of expert witness fees [under] section 998 is not incidental to the judgment but is instead a separately litigated issue” requiring a separate notice of appeal. (Fish v. Guevara, 12 Cal.App.4th 142, 148 (1993).)

Common Fund, Costs, Special Fee Shifting Statutes: 4/3 DCA Affirms Large Part Of Trial Judge’s Fee And Costs Rulings In Financial Elder Abuse/Derivative Litigation

Hornet Nest Of Fees And Costs Issues Resolved By Appellate Court.

            We knew right away that Acting Presiding Justice Bedsworth penned Horowitz v. Brown, Case No. G057412 (4^th Dist., Div. 3 Aug. 30, 2021) (unpublished) based on his distinctive writing style.  The appellate court faced a virtual hornet nest of fees and costs issues, with us distilling the ones that we saw of most importance.

            What happened here is that plaintiff was found to be a victim of financial elder abuse and gained some derivative recovery for an entity, but only against some defendants.  Plaintiff was 81 years old and got involved in making investments with her ex-husband’s real estate joint venture partner, which you can likely see led to the litigation which spawned over 5 years and 51 days of a trial.  In the end, plaintiff prevailed on financial elder abuse claims against some defendants and obtained some derivative benefit for an entity, with many of them being in the millions of dollars.  The case resulted in multiple motions for fees and costs, with plaintiff being awarded about $1.411 million in fees against four defendants, nothing in fees for gaining a derivative liability award (because she was advancing her personal interest over that of an entity), and all kinds of split decisions on routine costs. 

            The 4/3 DCA affirmed in major respects, but it reversed and remanded on some issues—the major ones which we highlight now.

            The appellate court agreed that plaintiff primarily recovered against many defendants on a financial elder abuse claim, which carries a prevailing party plaintiff fee entitlement.  Despite some overlap on contractual claims under a partnership agreement, the 4/3 DCA panel found that the financial elder abuse fee-shifting provision had primacy even though there was just a liability finding given that some of the defendants paid the damages earlier—with the 4/3 DCA agreeing with the consistent analysis in Arace v. Medico Investments, LLC, 48 Cal.App.5^th 977, 983 (2020) [a 4/2 DCA opinion].

            Next, some prevailing defendants were entitled to routine prevailing party costs under CCP § 1032, with the financial elder abuse shifting provision not dictating otherwise.  After all, plaintiff only recovered money for an entity derivatively, not herself personally.  (Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4^th 985, 990-991 (1998).)

            However, the reviewing court did remand on whether plaintiff could obtain recovery of denied fees on the derivative claim based on a common fund/substantial benefit doctrine.  After all, in the end, she did bear the fees to obtain the derivative award, with it being unfair to say that she should bear the costs when she did not entirely benefit with most of the advantage going to the entity upon whose behalf she was suing.

            Finally, because various defendants were involved, the costs awards had to be remanded to make sure there was an apportionment as to separate defendants with respect to jointly incurred defense costs.  (Charton v. Harkey, 247 Cal.App.4^th 730, 743-744 (2016).)

Costs, Deadlines, Fee Clause Interpretation, Lodestar: L.A. Groundwater Case Fee And Costs Awards Remanded For A Revisit By The Fifth District

Variety Of Costs, Fee Entitlement, And Lodestar Issues Explored In This Unpublished Opinion.

            Antelope Valley Groundwater Cases, Case No. F083138 (5^th Dist. Aug. 24, 2021) (unpublished) was a Los Angeles-venued case which produced a global settlement complete with a provision for certain parties to bear attorney’s fees and costs by class counsel.  Class counsel sought to recover $3,348,160 in attorney’s and paralegal fees (4,538.8 hours at $720 per hour for attorneys; 679.5 hours at $110 or $125 per hour for paralegals).  However, the trial judge awarded class counsel $2,269,400 in attorney’s fees and $80,224 in paralegal fees, reducing the attorney requested hourly rate from $720 to $500 per hour.  He also allocated fees among different parties and rejected two parties’ attempts to pay the awards out over time under Government Code sections 984 and 970.6.  He denied a 2.5 positive enhancement request.  The trial judge also taxed over $24,000 in routine costs requested by class counsel, triggering an appeal by the class.

            The Fifth District (although based in Fresno, not Los Angeles, but assigned the case on appeal for neutrality reasons) reversed and remanded with some specific instructions.  With respect to fees, the appellate panel initially determined that the settlement agreement did authorize fee/costs entitlement and then found that the trial judge’s reasoning on the lodestar was unclear, especially as to why the requested hourly rate was discounted downward from $720 and with a “Great Recession” lower rate rationale not explaining why higher rates were not justified from when it ended (2010 going forward).  Equally salient was the fact the lodestar could not be diminished solely or primarily because a governmental entity was the party with fee/costs exposure.  But the lower court did properly allocate fee/costs recovery among some parties and correctly denied the periodic payment requests because a fees/costs judgment was not a tort judgment against a public entity under section 984 and the requesting entities did not show that the L.A. County Board of Supervisors passed a hardship ordinance for purposes of satisfying section 970.6.  Finally, on the routine cost issues, class counsel did not have to use Judicial Council costs memorandum forms (they are optional only), the trial judge impliedly allowed counsel more time to file the costs memorandum, and there were arithmetic discrepancies which the appellate court could not decipher—sending all of this back for a re-do, including a relook at the enhancement request.               

Appeal Sanctions, Costs: 2/4 DCA Denies Requests From Prevailing Party In A Writ Proceeding For Attorney Fees To Be Included As Part Of Costs Award And For An Award Of Fees As A Sanction Against Defeated Party

Attorney Fees Are Not Included As Recoverable Costs Under California Rules Of Court, Rules 8.493(b) And 8.278(d), And A Passing Reference To An Award Of Fees As Sanctions, With No Showing Of Justification For Sanctions, Does Not Qualify As A Motion For Sanctions Under Rule 8.492(a).

            In Harden v. Superior Court, Case No. B311738 (2d Dist., Div. 4 August 19, 2021) (unpublished), defendant prevailing in a petition for writ of mandate, after the trial court declined to comply with the 2/4 DCA’s alternative writ, requested that attorney fees be included as part of the costs he was entitled to under California Rules of Court, rule 8.493(a).  Because attorney fees are not included in the list of recoverable costs under rules 8.493(b) and 8.278(d), and defendant provided no other basis for a fees award, the 2/4 DCA denied his request.  Additionally, the panel declined to consider defendant’s passing reference to an award of fees as sanctions being issued against plaintiff because the reference did not qualify as a motion for sanctions under rule 8.492(a), and defendant had not shown justification for an award of fees as a sanction.

Civil Rights, Costs: California Supreme Court Holds That Government Code Section 12965(b) Applies To Costs On Appeal And Vacates Award Of Costs On Appeal To Prevailing FEHA Defendant

The Court Of Appeal Made No Findings As To Whether FEHA Plaintiff’s Claims Were Objectively Groundless.

            In our Year In Review post of the top 30 decisions in 2020, we included as No. 22 the case of Ducksworth v. Tri-Modal Distribution Services, 47 Cal.App.5^th 532 which had been granted review by the California Supreme Court for determination as to whether it was proper for the Court of Appeal to award costs on appeal under CRC, Rule 8.278 against an unsuccessful FEHA claimant in the absence of a finding that the underlying claims were objectively frivolous. 

            That question was answered in Pollock v. Tri-Modal Distribution Services, Inc., Case No. S262699 (Cal. Supreme Court July 26, 2021) with the Cal. Supreme Court’s holding that Gov. Code § 12965(b) applies to costs on appeal.  In a 7-0 opinion authored by Justice Liu, the Cal. Supreme Court concluded that an appellate court may not award costs or fees on appeal to a prevailing FEHA defendant without first determining that the plaintiff’s action was frivolous, unreasonable, or groundless when brought, or that the plaintiff continued to litigate after it clearly became so.

            Additionally, the Court of Appeal’s judgment affirming the trial court’s summary judgment order on a statute of limitations administrative claims issue was reversed, with remand back to the Court of Appeal for the purpose of being remanded back to the trial court for further proceedings – with the Cal. Supreme Court determining that both the trial court and Court of Appeal applied the wrong standard in determining when the statute of limitations began to run.

Appealability, Costs, Discovery: Denial Of $1.1 Million For Electronic Discovery Costs Reversed Because Lower Court Seemed To Indicate No Discretion On Awarding Them

Modern Trend Is To Recognize E-Discovery Recoupment Costs As Long As They Are Justified.

            Ya know, times change, technology changes, and jurisprudence changes.  Although unpublished, City of Los Angeles v. PricewaterhouseCoopers, LLP, Case No. B305583 (2d Dist., Div. 5 July 8, 2021) (unpublished) shows how electronic discovery costs may be awardable, if justified, based on  evolving technological changes from an early appellate court decision which was adverse to recovery of these costs.  (We do not discuss the affirmance of some substantial costs reductions for out-of-town attorneys traveling and attending depositions, because the reductions were in order given that the same law firm had Los Angeles attorneys who could attend rather than New York travelling attorneys.  If you need support for these reductions, you can read the decision.)

            What happened here is that the City of Los Angeles voluntarily dismissed a suit, with defendant moving to recover about $1.1 million in electronic discovery costs, mainly for processing/loading, hosting, and producing documents.  The lower court denied all the requested costs based on an older decision in Science Applications Internat. Corp. v. Superior Court, 39 Cal.App.4^th 1095, 1103-1104 (1995), deciding that routine costs in this area should be denied in an earlier time where the technology costs were substantial and the rationale for granting them was more attenuated.  Much has changed with technology since Science Applications, given that subsequent decisions generally show a proclivity to award these electronic discovery costs as long as they are supported as being necessary and reasonable in nature.  (See, e.g., El Dorado Meat Co. v. Yosemite Meat & Locker Service, Inc., 150 Cal.App.4^th 612, 620 (2007); Bender v. County of Los Angeles, 217 Cal.App.4^th 968, 990-991 (2013); Hooked Media Group, Inc. v. Apple Inc., 55 Cal.App.5^th 323, 338-339, 351 (2020).)  Because these costs are not prohibited and can be awarded in the trial court’s discretion, the denial based on an outright ban had to be reversed and remanded for another look. 

            BLOG MILEAGE TIME—Although there is a split in thinking, this appellate panel also sided with the view that an order taxing routine costs is appealable as a post-trial order, following Mesa Shopping Center-East, LLC v. O Hill, 232 Cal.App.4^th 890, 898 (2014) and Gassner v. Stasa, 30 Cal.App.5^th 346, 354-355 (2018), but not following the contrary decision in Mon Chong Loong Trading Corp. v. Superior Court, 218 Cal.App.4^th 87, 92 (2013).  The panel found its conclusion was consistent with the treatment of collateral final orders.  (Krikorian Premiere Theatres, LLC v. Westminster Central, LLC, 193 Cal.App.4^th 1075, 1083 (2011).) 

Costs, Deadlines, Fee Clause Interpretation: Lender Defending Against Borrower’s Attempts To Enjoin Eventual Nonjudicial Foreclosure Properly Awarded $9.235 Million In Fees

However, Costs Award Of $332,704.20 Reversed For Failure To Timely File A Costs Memorandum, Although The Appellate Court Did Indicate Lower Court Could Entertain CCP § 473 Default Motion Based On Surprise If Lender Wanted To Renew Costs Issue.

            This next case, Rincon EV Realty LLC v. CP III Rincon Towers, Inc., Case Nos. A155104/A155284 (1^st Dist., Div. 4 June 10, 2021) (unpublished), is an interesting borrower/lender case which has yo-yoed between lower and appellate courts for several years after the lender eventually nonjudicially foreclosed on Rincon Towers (a San Francisco apartment complex).  However, lender did prevail in an action initiated by borrower to forestall foreclosure, with lender then seeking substantial attorney’s fees and costs under a Loan Agreement clause.  After an initial reversal and remand, lender sought $12.2 million in fees and costs, with the lower court awarding $9,235,712.93 in fees, but with it deferring a cost ruling until a new cost memorandum was filed.  Lender did that, claiming $909,548.03 in costs, $357,603.06 in statutory fees and $551,944.97 in costs awardable under the Loan Agreement.  The lower court only awarded statutory costs, reducing the request down to $332,704.30 as far as a court order.  Borrower appealed.

            Borrower argued that lender could not obtain contractual fees because the loan was non-recourse; however, the problem here was that the Loan Agreement contractual fees clause did apply to situations where the lender had to defend against a borrower’s action, rather than commence a lender action or suit against borrower seeking a monetary judgment.  Beyond that, the contractual “proceeding” language did not preclude lender from bringing a fees motion, because a “proceeding” was more akin to an “action” that lender did not commence.  Borrower next argued that the fee award was precluded by anti-deficiency California borrower protections, but that contention was not successful because borrower brought an unmeritorious suit to which lender had to respond—an action which did not implicate a lender attempting to renege on a non-recourse loan.  (See Jones v. Union Bank of California, 127 Cal.App.4^th 542, 547-548 (2005); Passanisi v. Merit-McBride Realtors, Inc., 190 Cal.App.3d 1496, 1509 (1987).)  So, the substantial fee award was affirmed on appeal.

            That brought the appellate court to the costs award, which was a little tricker to resolve.  The 1/4 DCA agreed that the costs memorandum was untimely filed, past the 15-day notice of entry filing deadline even though there were some issues still pending in the appellate court—the best measure was to protectively file it, something lender did not do by quite a bit of time.  However, that did not end the matter.   The appellate court was sympathetic to the fact that the complex procedural context of the case might have been a surprise to the lender such that a CCP § 473 discretionary motion to allow the filing of the belated costs memorandum might be successful.  But it did not want to do that, reversing the smaller component of the costs award (the larger component were damages, and rejected because they were not pled and were not subject to damages proof below) and remanding to the lower court to decide if discretionary default relief should be granted.  So, there might be hope on the cost component for lender.

Costs: SCOTUS Determines That Circuit Courts, Not District Judges Absent A Reference, Determine Whether To Deny Or Reduce Taxation Of Appellate Costs

Brightline Rule Adopted By SCOTUS On This Issue.

            In City of San Antonio v. Hotels.com, L.P., 593 U.S. __, Case No. 20-334 (U.S. May 27, 2021), the U.S. Supreme Court interpreted Federal Rule of Appellate Procedure 39 to vest in the circuit courts whether certain appellate costs would be denied or reduced.  San Antonio argued that the district court had discretion to do that, but SCOTUS rejected this approach by adopting a “bright-line” approach that the appellate court determines what is to be awarded, unless it refers it to the district judge for determination.  The case involved a supersedeas bond determination of $2.2 million, with the appellate court’s determination being dispositive and with the district court not being able to alter that determination. 

Costs, Probate: $1,910.84 Costs Award In Indispensable Estate Affirmed As Against Two Brothers

Appellate Court Was Peeved At Appeal Of Costs Award Under $2,000.

            Bilaver v. Bilaver, Case No. B296881 (2d Dist., Div. 3 Apr. 27, 2021) (unpublished) is another reality check where two brothers appealed a $1,910.84 costs award in favor of an indispensable party probate estate.  Because it was an indispensable party, the estate did not have to pay a filing fee to claim certain specified costs.  The estate’s costs for exhibit copies,  court reporter fees, and costs of publication in related, separate litigation were properly allowed, with no abuse of discretion shown.  The appellate court seem exasperated that an appeal was undertaken for costs under $2,000, understandably so!

Costs, Prevailing Party: No Abuse Of Discretion In Trial Court’s Denial Of Prevailing Party Fees And Determination That There Was No Prevailing Party In Mixed Results Action

It Is Well Within The Trial Court’s Discretion To Make A Determination That Neither Party Prevailed Sufficiently To Justify An Award Of Attorney Fees.

            In Ayala Boring v. HPS Mechanical, Case No. D076054 (4^th Dist., Div. 1 March 19, 2021) (unpublished) – which resulted in two separate appeals – contractor defendant entered into a contract with the City of San Diego to work on a trunk sewer project, and subcontracted work to plaintiff subcontractor – an underground pipeline boring contractor – to install casings and sewer lines at two locations under Interstate 8.  When one of the locations revealed conditions requiring additional unanticipated work, City, contractor and subcontractor agreed to a change order to pay subcontractor an additional $203,000 for the extra work.  However, when lanes of the I-8 began heaving in the area subcontractor was performing work, contractor decided to withhold payment of the $203,000 until subcontractor repaired the heaving damage.  Because subcontractor refused to make the repairs, contractor made them at the cost of $199,559.34.

            Subcontractor sued contractor and its bonding companies for breach of contract – seeking $451,113.98 in compensatory damages for payment of the $203,000 and other amounts it alleged contractor wrongfully withheld – and later amended to add a common count for money had and received, and reduced damages to $203,000 at trial.  Contractor cross-complained for breach of contract – seeking reimbursement of the costs to repair the heaving damage and for indemnity re costs, expenses, attorney and expert witness fees in connection with the heave and resulting dispute. 

            The parties obtained mixed results at trial – with the jury returning special verdicts in favor of subcontractor on its common count cause of action and on contractor’s breach of contract claim, and in favor of contractor on subcontractor’s breach of contract claim.  Ultimately, subcontractor was awarded $249,470 in damages by the jury, and another $94,733.33 in prejudgment interest, $227,945 in prevailing party fees, and $32,961.81 in costs on its complaint and for defeating contractor’s cross-complaint by the trial court.  The first appeal followed and the 4/1 DCA reversed subcontractor’s wins – remanding for further proceedings, and concluding contractor was entitled to its costs on appeal.

            On remand, contractor sought $579,838.50 in prevailing party fees pursuant to the fee provision in the parties’ subcontract.  The trial court denied – finding there was no prevailing party on the contract claims, but awarded contractor $205,095.63 in costs and disbursements which included various trial costs, costs on appeal, surety bond premiums, and expert witness, mediation and reporter’s fees – results affirmed on the parties’ second appeal, with exception to reversal of $55,468 in expert witness fees and $2,280 in mediation fees incurred for a different case.

            There was no abuse of discretion in the trial court’s determination that there was no prevailing party as neither party achieved complete victory on all of the contract claims.  As to the reversal of expert witness fees awarded to contractor, there was no statutory prevailing party basis, pursuant to Code Civ. Proc. § 1033.5(a)(8), for the trial court’s award.  Further, there was no basis for entitlement under the parties’ fees/costs provision as there was no prevailing party.  Finally, as to the reversed mediation fees, the fees were incurred for mediation sessions in a different case months after the jury trial in this case.

Civil Rights, Costs, Special Fee-Shifting Statutes: Ninth Circuit Vacates And Remands $5,962.11 Costs Award To Defendant Landlord Prevailing On Summary Judgment Against Plaintiff Tenant Claiming Race And Disability Discrimination

In So Doing, The Ninth Circuit Joins The First, Second, Fourth, and Fifth Circuits In Holding That The Christiansburg Standard Applies To The Award Of Attorney’s Fees And Costs Under The Fair Housing Act.

            The U.S. Supreme Court, in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), held that, under the fee-shifting provision of Title VII of the Civil Rights Act (42 U.S.C. § 2000e-5(k)), attorney’s fees should be awarded to a prevailing defendant only if the plaintiff’s claim was frivolous, unreasonable or without foundation.

            In Rodney Green, Sr. v. Mercy Housing, Inc., Case Nos. 20-15134/20-15358 (9^th Cir. March 19, 2021) (published), plaintiff tenant appealed the district court’s granting of summary judgment to defendant landlord and subsequent award of $5,962.11 in costs.  The Ninth Circuit reversed and remanded in part the grant of summary judgment in a separate memorandum opinion.

            As to the costs award, plaintiff  - with claims of racial and disability discrimination in violation of the Fair Housing Act and the California Fair Employment and Housing Act – argued that the district court abused its discretion in awarding costs to defendant without applying the Christiansburg standard and making a determination as to whether plaintiff’s claims were frivolous, unreasonable or groundless.  The Ninth Circuit agreed – joining the First, Second, Fourth, and Fifth Circuits – in holding that the Christiansburg standard applies to the FHA, where the danger of chilling civil rights enforcement based on the risk of incurring costs even in the strongest of claims is as equally present in a tenant’s Fair Housing case as it is in an employee’s Title VII case.

            Contrary to defendant’s claim that the fee-shifting provisions of the FHA and ADA are distinguishable, the Ninth Circuit found that costs are treated as parallel to – rather than as a subset of – attorney’s fees under both the FHA and ADA. (Brown v. Lucky Stores, Inc., 246 F.3d 1182, 1190 (9th Cir. 2001).) 

Allocation, Civil Rights, Costs, Employment: Former Employer Properly Was Denied Attorney’s Fees Where FEHA Case Had Some Substance

However, 2/3 DCA Follows Roman Opinion On When To Award Costs On Non-FEHA Claims.

            In Chevreaux v. Long Beach Memorial Medical Center, Case Nos. B291268/B292937 (2d Dist., Div. 3 Feb. 24, 2021) (unpublished), a jury returned a defense verdict in favor of a former employer on a non-FEHA, Tameny retaliation claim after she dismissed two FEHA claims (age discrimination and a CFCA violation) on the eve of trial.   The lower court subsequently denied attorney’s fees to defendant after finding the dismissed FEHA claims were not baseless.  The trial judge also granted plaintiff’s motion to tax costs finding he could not award any costs to the defense because it did not apportion the costs expended to defend non-FEHA claims from those attributable to its defense of her FEHA claims, as required by the 2/7 DCA’s decision in Roman v. BRE Properties, Inc., 237 Cal.App.4^th 1040, 1059 (2015). 

            The 2/3 DCA mainly affirmed, but it reversed and remanded to see if the defense might be awarded some routine costs for jury fees, court reporter fees, and trial exhibits.  It agreed that there was enough evidence to show an inference of age discrimination because plaintiff, aged 62, was replaced with women who were 50 and 44 even though the claims were dismissed before trial.  This Division also agreed with the reasoning in Roman, which allows a lower court discretion to see if non-FEHA claims did not overlap so as to be able to apportion out costs not related to the nonfrivolous FEHA claims.  Because the jury only considered one non-FEHA claim, it was fair game for the trial judge make factual determinations as far as awarding jury fees, court reporter fees, and trial exhibit costs in favor of the defense (considering whether the costs were reasonable, necessary, and whether there was an agreement to split court reporter fees). 

Costs, Employment: Trial Court’s Costs Award To Defendant Prevailing Against FEHA And DJOA Claims Proper Where The Costs Were Awarded Only For The DJOA Claims

Costs May Not Be Awarded To Prevailing FEHA Defendants Unless Plaintiff’s Action Was Frivolous, Unreasonable, Or Groundless When Brought Or Continued, But A Trial Court May Award Costs To A Prevailing Defendant For Non-FEHA Claims Litigated With FEHA Claims.

            In Jones v. Quality Coast, Case No. B297425 (2d Dist., Div.5 February 22, 2021) (unpublished), plaintiff had worked as a janitor for approximately 11 years at an air traffic control facility administered by the FAA – being employed by various janitorial companies which contracted with the FAA during those years.  When defendant became the janitorial service provider, it did not hire plaintiff.

            Plaintiff sued – claiming race and gender discrimination pursuant to FEHA, and a violation of the Displaced Janitor Opportunity Act (DJOA) (Labor Code § 1060 et seq.) which obligated defendant to hire “employees” of the predecessor company for a 60-day period following termination of predecessor company’s contract with the FAA. 

            When plaintiff’s FEHA claims were defeated by jury verdict, and plaintiff advised the trial court that he had presented at trial all of the evidence he would present in the DJOA claim, defendant successfully moved for judgment on the basis that plaintiff was a supervisor, not an employee as defined by the DJOA, and, therefore, not entitled to protection under the DJOA.  Additionally, the trial court determined defendant to be the prevailing party and awarded it the costs it incurred in the DJOA claim.

            Plaintiff appealed, but the appellate panel affirmed.  Substantial evidence supported the trial court’s finding that plaintiff was a supervisory employee and, therefore, not entitled to protection under the DJOA which requires contractors who are awarded contracts for janitorial or building maintenance services at a particular site to retain certain employees working for the terminated contractor for a 60-day transition employment period, and to offer those workers continued employment if their performance during the 60-day period is satisfactory. (Lab. Code § 1061(b)(1) & (f).) The DJOA defines an “employee” as a person who works at least 15 hours per week providing janitorial or building maintenance services but who is not a “managerial, supervisory, or confidential employee, including those employees who would be so defined under the federal Fair Labor Standards Act.” (§ 1060(c).)

            The trial court’s costs award to defendant was proper.  Under FEHA, costs may only be awarded to a prevailing defendant if plaintiff’s action was frivolous, unreasonable, or groundless when brought, or if plaintiff continued to litigate after it clearly became so.  However, a trial court may award costs for non-FEHA claims litigated with FEHA claims.  The trial court properly awarded costs to defendant, under Code Civ. Proc. § 1032, for prevailing on plaintiff’s DJOA claim.

Costs, Deeds of Trust, Prevailing Party, Section 1717, Seriously: 4/3 DCA Affirms Mixed Results Fee Awards To One Of Two Plaintiffs Of $34,740 And A Combination Of $35,577 To Two Of Three Defendants

The Title Issue That Started It All Was Partly Corrected And Seller Resumed Payments Years Before, But The Parties Battled On All The Way To Trial – Incurring A Combined Total Of $202,299.50 In Fees, Plus Costs.

            In our Mission Statement, we quote a statement made by Retired Justice Wallin in Deane Gardenhome Assn. v. Dentkas, 13 Cal.App.4th 1394, 1399 (1993).  “All too often attorney fees become the tail that wags the dog in litigation.”  As Justice Wallin explained, “Often the economic value of what the [litigant] gains is minute compared to the litigation costs.”  This next case exemplifies Justice Wallin’s observation.

            In Real Properties Network v. D’Alessio, Case No. G058351 (4^th Dist., Div. 3 February 22, 2021) (unpublished), plaintiff Michael Mitchell and his company Real Properties Network, LLC (Network) sued defendant Dennis D’Alessio and his two companies, Newport Harbor Ventures, LLC (Ventures) and D’Alessio Investments, LLC (Investments) seeking quiet title to a Newport Beach condo Mitchell purchased from D’Alessio – along with causes of action for fraud, slander of title, and other related claims – following discovery of a title problem wherein defendant Ventures recorded a grant deed transferring the condo to plaintiff Network, but weeks prior had also recorded a quitclaim deed transferring the condo to defendant Investments. 

            Defendant Investments also filed its own lawsuit against plaintiff Network for repayments, also seeking late fees for various payments, when plaintiffs stopped making interest payments because of the title problem and refused to make the scheduled balloon payment pursuant to the 2-year note on the property.  The lawsuits were consolidated.

            Despite the title and payment disputes being partly resolved by a corrective grant deed and interest/balloon payments years before, the parties argued entitlement to additional remedies – battling all the way to trial where they received mixed results.  Plaintiff Mitchell did not prevail on any of his causes of action, but the trial court found in favor of plaintiff Network against defendants Investments and Ventures on the quiet title cause of action, against defendant Ventures only on plaintiffs’ breach of warranty claim, and defendants prevailed on plaintiffs’ remaining causes of action.  Additionally, plaintiff Network prevailed on defendants’ only remaining claim by the time of trial – the late fees.  No party recovered money from any other party.

            Then came the motions for fees and costs from both sides.  The parties had incurred a combined total of $202,299.50 in fees, plus costs.  Plaintiffs sought $74,722.50 in fees, and defendants sought $127,577 in fees.  We cannot imagine the parties were too happy with the mixed results they received.  The trial court granted the motions to tax costs on both sides – so no costs were awarded due to the parties’ failures to apportion between successful and unsuccessful claims.  Additionally, the trial court made reductions on both sides for excessive billing and other issues.  In the end, plaintiff Network was awarded $34,740 in attorney fees for defeating Investments’ late fee claims, but no fees on the title claim because it did not prevail against D’Alessio – the only signatory to the Agreement, and plaintiff Mitchell was denied fees.  Defendant Investments’ fee request was denied because the fee provision in the Note was too narrowly worded to reach the claims in the title action.  As to D’Alessio, the trial court found he was entitled to an award of his fees as he had prevailed on all claims in the title action.  However, because defendant Ventures was a non-signatory to the parties’ Agreement, it was entitled only to its fees on the contract claims in the title action, under Civil Code section 1717, not on the tort claims.  This resulted in a combined $35,577 award to defendants D’Alessio and Ventures – which beat out Network’s award by $837, although defendants incurred $52,854.50 more in fees than plaintiffs. 

            Defendants appealed, but the results were not mixed this time – with the 4/3 DCA affirming in a 3-0 opinion authored by Justice Thompson.

            Three out of four of defendants’ arguments declared prevailing party entitlement, but the appellate panel disagreed.  Investments was not the prevailing party on its claims by having induced plaintiffs to make the interest and balloon payments.  By the time of trial, Investments only remaining claim was for late payments and was defeated.  Likewise, defendants were not entitled to their costs as the prevailing parties where they had failed to allocate their costs between the claims where they were successful and those where they were not.  Additionally, defendants’ contention that D’Alessio’s complete victory entitled him to all claimed fees failed to take into account that Civil Code section 1717 only permits recovery of “reasonable” attorney fees by a prevailing party in an action on a contract containing an attorney fee provision.  The trial court had properly reduced for excessive billing, clerical tasks, work performed on a cross-complaint against unrelated parties, and fees incurred for the late fees claim.  Finally, the panel found no abuse of discretion in defendants’ challenge of the evidentiary support for plaintiffs’ fee motion.

BLOG NOTE:  This case, like some others before it, caused us to ask, “Seriously?!” – hence the addition of a new category beginning with this post because . . . seriously . . . how could we not?

Cases Under Review, Costs: SCOTUS Grants Certiorari On The Question Of Whether District Courts Have Discretion To Deny Or Reduce Appeal Costs

Particular Question Dealt With Substantial Supersedeas Bond Premiums and Interest.

            On January 8, 2021, the U.S. Supreme Court granted certiorari on an appellate costs issue, in City of San Antonio v. Hotels.com, No. 20-334 (U.S.), to wit:  “Whether, as the U.S. Court of Appeals for the 5th Circuit alone has held, district courts “lack[] discretion to deny or reduce” appellate costs deemed ‘taxable’ in district court under Federal Rule of Appellate Procedure 39(e).”

            In this particular case, Hotels.com eventually obtained reversal of a judgment and then sought to recoup $2,008,359 in supersedeas appellate bond premiums and interest as F.R.App.P. 39(e) appellate costs.  The Fifth Circuit found it had no discretion to reduce or deny the appellate costs request, a decision at odds with the views of the First, Second, Fourth, Sixth, Eighth, Ninth, Eleventh, and Federal Circuits.  The framing of the issue alone might suggest that this one may well get reversed—but we shall see!

Costs: No Costs Awarded To Prevailing Party Winning $2,000 And Limited Equitable Relief In Unlimited Case Involving Feuding Neighbors

Trial Judge Did Not Abuse Discretion In Not Awarding Litigation Costs Where Ultimate Win Was Minor In Nature In Unlimited Civil Case.

            All litigation practitioners should be attuned to the next case, Van Taylor v. Ivie, Case No. B281545 (2d Dist., Div. 3 Jan. 26, 2021) (unpublished), where litigation costs are claimed in an unlimited case where your client won much less than the $25,000 jurisdictional amount.

            In this one, neighbors had a 20-year dispute over a narrow strip of land and block wall between their homes.  After 3 trials (some before a jury and some before a court) and seven appeals, one side received a jury award of $2,000 in damages on trespass/nuisance claims, with the trial judge also awarding some permanent injunctive relief where one side had to remove certain items on a wall between the two properties.  We can only imagine the attorney’s fees spent on this fiasco, but the winning side was denied normal litigation costs (much less than fees), prompting an appeal on the narrow costs issue.

            The 2/3 DCA affirmed the costs denial.  When a monetary award is below the $25,000 unlimited case threshold, the lower court has discretion to deny costs under CCP §1033(a).  Where a party obtains equitable relief, the lower court has the same discretion as far as awarding or denying costs under CCP §1032(a)(4).  Because the trial judge did weigh which side actually achieved their litigation objectives as compared to the contested claims (deciding no one clearly prevailed), it was no abuse of discretion for the trial judge to deny costs to the “winning” side.    

Costs: Reversal Of Costs Awarded To Defendants Necessitated By Reversal Of Trial Court’s Granting Of Defendants’ Summary Adjudication Motion On Negligent Misrepresentation Claim

Plaintiff Adequately Alleged Negligent Misrepresentation, Submitted Evidence Demonstrating A Triable Issue Of Fact, And Defendants Did Not Establish That Plaintiff Could Not Prove The Elements Of Negligent Misrepresentation.

            For a nice discussion re the elements of intentional and negligent misrepresentation, we commend our readers read Borman v. Brown, Case Nos. D076239/D076748 (4^th Dist., Div. 1 January 15, 2021) (published). 

            In Borman, plaintiff sought treatment for a droopy eyelid and brow from eye center physician defendant who advised that a brow lift procedure would correct the issue, but would not be covered by plaintiff’s insurance, and that an eye lift could alternatively be performed and covered by plaintiff’s insurance.  Plaintiff could not afford a procedure not covered by insurance and agreed to have defendant perform the eye lift to resolve her issues.  Afterward, she continued to have difficulties with her eyelid and brow, so she consulted with another physician who informed her that the brow lift, not eye lift, was the procedure that should have been performed for her situation.  Additionally, plaintiff learned the brow lift would have been covered by her insurance had defendant done the appropriate documentation of the need for the procedure and submitted it to the insurance company for approval.

            Plaintiff sued defendant physician and the eye center – alleging causes of action for professional negligence, lack of informed consent, fraud and deceit, and medical battery.  The trial court granted defendants’ summary adjudication as to the fraud and deceit and battery causes of action.  The remaining causes of action went to trial – with the jury returning verdict in defendants’ favor – and the trial court also entered a postjudgment order awarding costs to defendants.  

            The 4/1 DCA reversed and remanded for further proceedings on plaintiff’s fraud and deceit cause of action insofar as it pled a claim for negligent misrepresentation.  In a 3-0 opinion, authored by Justice Aaron, the panel found the trial court erred in granting summary adjudication.  Plaintiff had adequately alleged the tort of deceit based on negligent misrepresentation, had submitted evidence to the trial court demonstrating a triable issue of fact with respect to the intent to induce reliance element, and defendants had not established that plaintiff could not prove the elements of negligent misrepresentation.  Reversal and remand for the negligent misrep claim necessitated reversal of the costs award order issued in defendants’ favor.