Nevis Homes LLC v. CW Roofing, Inc.

Filed 5/15/13
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CERTIFIED FOR PARTIAL PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
NEVIS HOMES LLC et al., B237907
Cross-complainants and Appellants, (Los Angeles County
Super. Ct. No. GC037387)
v.
CW ROOFING, INC.,
Cross-defendant and Appellant.
APPEALS from orders of the Superior Court of Los Angeles County. Jan A.
Pluim, Judge. Affirmed as modified.
Tom S. Chun for Cross-defendant and Appellant CW Roofing, Inc.
Selman Breitman, Elaine K. Fresch, Rachel E. Hobbs and Sheila A. Baker for
Cross-complainants and Appellants Nevis Homes LLC et al.
_____________________________________
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Pursuant to California Rules of Court, rules 8.1100 and 8.1110, this opinion is
certified for publication with the exception of parts II, III and IV of the Discussion.
In the published portion of this opinion we hold that, if a written notice of
judgment or dismissal is served by mail within the State of California, the time for filing
a memorandum of costs is extended by five days. In the unpublished portion of this
opinion we consider who is a “prevailing party” for purposes of entitlement to costs
under Code of Civil Procedure section 1032.1 Finally we affirm the trial court‟s denial of
the parties‟ motions for sanctions. We modify the order taxing costs and affirm the order
as modified.
FACTS AND PROCEEDINGS BELOW
A homeowners‟ association brought a construction defect action against Nevis
Homes, LLC and other defendants (collectively Nevis). Nevis cross-complained against
CW Roofing, Inc. (CWRI) and Daniel Suh, doing business as the CW Roofing Co., (Suh)
among others. In due course, the homeowners‟ association settled with Nevis and Nevis
settled with Suh and other cross-defendants. The settlement agreement stated: “Each of
the SETTLING PARTIES acknowledge and agree that each of them is to bear his, her, or
its own costs.” The settlement agreement did not name CWRI as one of the “settling
parties” nor did anyone sign the agreement on CWRI‟s behalf. The agreement did
provide, however, that “the release of [CWRI] by Defendants is a condition and material
term of this settlement.”
After the “settling parties” signed the settlement agreement, Nevis dismissed
its cross-complaint with prejudice as to all the cross-defendants including CWRI. Nevis
mailed a written notice of entry of dismissal to CWRI on July 14, 2011. CWRI did not
file its cost bill until August 2, 2011, 19 days after Nevis mailed the notice of entry of
dismissal. Nevis moved to strike CWRI‟s cost bill on the ground that it was untimely
under California Rules of Court, rule 3.1700(a),2 which, as applicable here, requires the
cost bill to be filed within 15 days after the date of service of a written notice of entry of
1
All statutory references are to the Code of Civil Procedure.
2
All rule references are to the California Rules of Court.
2
dismissal. Nevis also moved for sanctions against CWRI for filing a frivolous request for
costs on the ground that CWRI had already been paid most of its costs by its insurance
carrier. CWRI in turn sought sanctions against Nevis for seeking sanctions against it.
The trial court granted the motion to tax costs in its entirety. The court denied the
parties‟ motion for sanctions.
CWRI appeals from the orders denying it costs and sanctions against Nevis. Nevis
cross-appeals from the order denying it sanctions against CWRI.
DISCUSSION
I. CWRI’S MEMORANDUM OF COSTS WAS TIMELY BECAUSE
THE NOTICE OF DISMISSAL WAS SERVED BY MAIL.
Nevis contends that the cost bill was untimely because it was not filed within
the 15-day time period specified by rule 3.1700(a)(1). CWRI maintains, however, that its
cost bill was timely under section 1013, subdivision (a), which extended the time to file
by five days because Nevis served the notice of dismissal by mail. We agree. The time
to file a motion to tax costs was extended by five days because service was by mail.
Rule 3.1700(a)(1) provides in relevant part: “A prevailing party who claims costs
must serve and file a memorandum of costs within 15 days after . . . the date of service of
written notice of entry of judgment or dismissal.”
Section 1013, subdivision (a), states in pertinent part: “In the case of service by
mail, . . . [s]ervice is complete at the time of the deposit, but any period of notice and any
right or duty to do any act or make any response within any period or on a date certain
after service of the document, which time period or date is prescribed by statute or rule of
court, shall be extended five calendar days, upon service by mail, if the place of address
and the place of mailing is within the State of California[.] . . . This extension applies in
the absence of a specific exception provided for by this section or other statute or rule of
court.”
Two reported opinions have assumed without analysis that the five-day extension
of time under section 1013, subdivision (a), applies to the time for filing a memorandum
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of costs. (Lee v. Wells Fargo Bank (2001) 88 Cal.App.4th 1187, 1199; Robinson v.
Grossman (1997) 57 Cal.App.4th 634, 649.)3 Nevis challenges that assumption.
Nevis contends that rule 3.1700 provides an exception to the five-day
extension and points out that rule 3.1700(b), pertaining to the time for opposing a cost
memorandum, states that, “[i]f the cost memorandum was served by mail, the period is
extended as provided in . . . section 1013.” This reference to section 1013, Nevis
observes, is conspicuously absent from rule 3.1700(a), pertaining to the time for filing
a cost bill. Nevis thus reasons that, by including a reference to section 1013 in
rule 3.1700(b), but not in rule 3.1700(a), the Judicial Council must have intended that
section 1013 not apply to rule 3.1700(a), which therefore is an exception to that statute.
Furthermore, Nevis argues, the Judicial Council had a reason for excluding the
five-day extension for filing cost bills. The notes accompanying former rule 870,
the predecessor to rule 3.1700, show that the Judicial Council increased the time for
“filing and serving a memorandum of costs and a notice of motion to tax costs from
10 to 15 days so that the motions relating to costs, attorney‟s fees and new trials may be
heard simultaneously.” (Former rule 870 (1988) Drafter‟s Note [new trial motions
must be filed within 15 days of the date of mailing notice of entry of judgment
(§ 659, subd. (a)(2)) and the five-day extension is expressly excluded by § 1013,
subd. (a)].)
We disagree with these arguments. No statute or rule of court “specifically”
exempts cost memoranda from the five-day mailing extension in section 1013,
subdivision (a). Moreover, section 1013, subdivision (a), specifies the items to which
the extension does not apply. A memorandum of costs is not among those exceptions.
Nor does rule 3.1700 specifically exempt a cost memorandum from the time extension
3
Nevis erroneously claims that three cases hold section 1013, subdivision (a),
does not apply to the filing of a cost memorandum. In fact, none of the cases Nevis cites
even mentions section 1013. (Fries v. Rite Aid Corp. (2009) 173 Cal.App.4th 182, 185;
Jones v. John Crane, Inc. (2005) 132 Cal.App.4th 990, 1012; Sanabria v. Embrey (2001)
92 Cal.App.4th 422, 426.)
4
provided by section 1013, subdivision (a). Regardless of what the Judicial Council may
have had in mind when it adopted former rule 870, its intent cannot trump the plain
meaning of the statute. We are not authorized to rewrite the plain language of a statute to
conform to an assumed intent that does not appear from the language. (In re Hoddinott
(1996) 12 Cal.4th 992, 1002.)
Finally, Nevis contends that applying section 1013, subdivision (a)‟s five-day
extension to the time for filing memoranda of costs under rule 3.1700(a) would have an
unfair and unintended result because a five-day extension does not apply if the notice is
mailed by the clerk of the court4 but, accepting the interpretation proposed by CWRI, the
extension would apply if the notice was mailed by a party. Nevis argues that the five-day
extension under section 1013, subdivision (a), applies only “[i]n case of service by mail.”
Thus, it applies to the “service of written notice of entry of judgment or dismissal” by a
party if the service is by mail. (Rule 3.1700(a), italics added.) But, under the terms of
rule 3.1700(a), the five-day extension does not apply when the notice is sent by the clerk
pursuant to section 664.5 because based on the wording of that section, the clerk does not
“serve” the notice but only “mails” it. Because the case before us falls into the category
of cases in which the notice was undisputedly “served,” we need not address the
theoretical problem raised by Nevis as to what would be the result if the notice were
mailed by the clerk.
II. CWRI WAS A PREVAILING PARTY FOR PURPOSES OF
RECOVERING COSTS UNDER SECTION 1032 BUT IS NOT
ENTITLED TO A DOUBLE RECOVERY.
A. CWRI Was A Prevailing Party In The Action Against It
By Nevis.
Nevis contends that there is no prevailing party for purposes of costs when the
defendant is dismissed pursuant to a settlement agreement. We disagree.
4
Section 664.5, subdivision (b), provides that, in a contested or special proceeding
in which a prevailing party is not represented by counsel, “the clerk of the court shall
mail notice of entry of judgment to all parties who have appeared in the action or special
proceeding . . . .”
5
Under section 1032, subdivision (a)(4), a “prevailing party” includes “a defendant
in whose favor a dismissal is entered.” Subdivision (b) of the statute provides: “Except
as otherwise expressly provided by statute, a prevailing party is entitled as a matter of
right to recover costs in any action or proceeding.” It is undisputed that CWRI was a
defendant in the cross-complaint filed by Nevis and that it was dismissed by Nevis
on July 11, 2011. This makes CWRI a prevailing party under section 1032,
subdivision (a)(4). We know of no statute that would deny costs to CWRI, nor does
Nevis cite any. Therefore, under subdivision (b) of section 1032, CWRI is entitled to
its costs.
Whatever merit Nevis‟s contention might have if CWRI were a settling party, it
has no merit here where CWRI was not a “settling party.” Rather, CWRI was dismissed
as a result of a settlement between other parties. Section 1032, subdivision (a)(4)‟s
definition of a prevailing party contains no exception for dismissals entered pursuant to a
settlement agreement, and section 1032, subdivision (b), prevents courts from
engrafting exceptions onto the clear language of the statute. (Nelson v. Anderson (1999)
72 Cal.App.4th 111, 129.) None of the cases Nevis cites in support of its argument is on
point.
B. CWRI Is Not Entitled To A Double Recovery.
CWRI submitted a cost bill for $4,520 representing filing and motion fees and
costs of depositions including travel and transcription costs. Nevis moved to tax most of
these costs on the ground that CWRI had already received payment for them from its
insurer Gemini. Nevis admits, however, that Gemini did not pay all of the costs that
CWRI sought in its cost bill. CWRI does not deny that it received payment for a majority
of the costs from Gemini but contends that under the collateral source doctrine Nevis
should not profit from CWRI‟s foresight in obtaining insurance coverage.5
5
Gemini contends CWRI was not its insured at the time of the loss. Nevertheless, it
is paid a portion of CWRI‟s costs.
6
The collateral source doctrine applies to tort damages, not to damages for breach
of contract. (Bramalea California, Inc. v. Reliable Interiors, Inc. (2004) 119 Cal.App.4th
468, 472.) It is an exception to the fundamental principle that a party cannot receive
a double recovery for the same loss. (Ibid.; Plut v. Fireman’s Fund Ins. Co. (2000)
85 Cal.App.4th 98, 107.) It rests instead on the principle that “„the tortfeasor‟s
responsibility [is] to compensate for all the harm that he causes, not confined to the net
loss that the injured party receives.‟” (Plut, at p. 108.) If applied to an action based on
breach of contract, the collateral source rule would violate the contractual damage rule
that no party may profit more from the breach of an obligation than from its performance.
(Bramalea, at p. 472.)
We conclude that, although CWRI is entitled to costs as a prevailing party, it is
not entitled to a double recovery. Section 1033.5, subdivision (c)(3), requires that
“[a]llowable costs shall be reasonable in amount.” It is unreasonable as a matter of law
to allow a party to a contract action to recoup for a second time the litigation costs that it
has already recovered.
Accordingly, we modify the trial court‟s order to tax CWRI‟s allowable costs to
the extent they duplicate costs previously paid by Gemini.
III. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION
IN DENYING NEVIS’S MOTION FOR SANCTIONS
AGAINST CWRI.
Nevis moved for sanctions against CWRI under section 128.7, subdivision (b),
on the grounds that CWRI‟s attempt to obtain a double recovery of costs was improper
and not supported by the facts and its invocation of the collateral source rule was
frivolous.6 The trial court denied the motion. We review the court‟s ruling for abuse of
discretion. (Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, 1391.)
6
As relevant here, section 128.7 states: “(a) Every pleading, petition, written notice
of motion, or other similar paper shall be signed by at least one attorney of record . . . [¶]
(b) By presenting to the court . . . a pleading . . . or other similar paper, an attorney . . . is
certifying that to the best of the person‟s knowledge, information, and belief, formed after
7
The record does not disclose any evidence that CWRI brought its memorandum of
costs solely to cause unnecessary delay or to harass Nevis.
As discussed above, we have found that CWRI is entitled to recover the portion of
its allowable costs not paid by Gemini. Thus, its cost bill was not totally unsupported by
the facts.
The Legislature has defined “[f]rivolous” as “(A) totally and completely
without merit or (B) for the sole purpose of harassing an opposing party.” (§ 128.5,
subd. (b)(2).) Thus, a motion is “[f]rivolous” only if “„any reasonable attorney would
agree such motion is totally devoid of merit.‟” (Decker v. U.D. Registry, Inc., supra,
105 Cal.App.4th at p. 1392.) CWRI‟s attempt to invoke the collateral source doctrine to
justify recovery from Nevis of the full amount of its allowable costs is not so contrary to
statutory or case authorities that it may be called totally and completely without merit.
IV. CWRI IS NOT ENTITLED TO SANCTIONS AGAINST NEVIS.
CWRI argues that Nevis should be sanctioned because its argument that CWRI
was not a prevailing party was “without merit.” We disagree. Nevis offered plausible
arguments in support of its position, and, even though we reject Nevis‟s arguments, we
cannot say that they are totally devoid of merit.
an inquiry reasonable under the circumstances, all of the following conditions are met:
[¶] (1) It is not being presented primarily for an improper purpose, such as to harass or to
cause unnecessary delay or needless increase in the cost of litigation. [¶] (2) The claims,
defenses, and other legal contentions therein are warranted by existing law or by a
nonfrivolous argument for the extension, modification, or reversal of existing law or the
establishment of new law. [¶] (3) The allegations and other factual contentions have
evidentiary support . . . . [¶] (c) If, after notice and a reasonable opportunity to respond,
the court determines that subdivision (b) has been violated, the court may, subject to the
conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or
parties that have violated subdivision (b) or are responsible for the violation.”
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DISPOSITION
The order taxing costs is modified to tax CWRI‟s allowable costs only to the
extent that they duplicate costs previously paid to or on behalf of CWRI by Gemini. The
order is affirmed as modified. The order denying the motions for sanctions is affirmed.
Each party is to bear its own costs on appeal.
CERTIFIED FOR PARTIAL PUBLICATION.
ROTHSCHILD, Acting P. J.
We concur:
CHANEY, J.
JOHNSON, J.
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