Apex Wholesale v. Frys Electronics

Filed 2/5/10 Apex Wholesale v. Frys Electronics CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from orders of the Superior Court of San Diego County, Yuri Hofmann, Judge. Affirmed.

In this third appeal in this matter, Apex Wholesale, Inc. (Apex) challenges the court's award of costs to Fry's Electronics, Inc. (Fry's) following the court's grant of summary judgment and this court's upholding of that judgment on appeal.

In the original trial in this matter, judgment was entered in favor of Fry's. Thereafter, Fry's was awarded costs in the amount of $44,836. Apex appealed the judgment, and we reversed as to one cause of action, based upon the court's instructional error, and affirmed the remainder of the judgment.

Following remand, the court granted summary judgment on Apex's one remaining cause of action, which we affirmed on appeal. Following the court's grant of summary judgment in its favor, Fry's filed a new memorandum of costs, seeking a total of $191,079.40 in costs. No opposition was filed and costs were added to the judgment in the amount sought.

Over one year later, Apex brought a motion to strike Fry's memorandum of costs, arguing that it had never been served with the cost memorandum, and therefore the costs should be set aside on the basis of extrinsic fraud. Fry's opposed the motion, asserting that it had properly served the memorandum of costs by mail to Apex's attorneys. The court found that although there was no evidence of extrinsic fraud, it appeared counsel for Apex had never received the costs memorandum. Exercising its equitable powers, the court granted the motion to strike and allowed Fry's to file and serve a new memorandum of costs. The court also found that the order awarding Fry's costs following the original trial in this matter was still in effect and limited Fry's potential cost award on any new memorandum of costs to those costs it incurred following remand after Apex's first appeal.

Thereafter, Fry's filed and served a new memorandum of costs, seeking post-remittitur costs in the amount of $5,083.33, and Apex moved to strike or tax that memorandum. The court denied Apex's motion to strike the memorandum of costs, and, with the exception of denying Fry's service of process fees in the amount of $189.55, a reduction of other service of process fees by $753.50, and denial of $867.20 in travel expenses, denied the motion to tax.

Apex appeals the denial of its motions to strike/tax Fry's memorandum of costs asserting the court erred in (1) allowing Fry's to file an untimely memorandum of costs without meeting the requirements of Code of Civil Procedure section 473; (2) finding the order following the original trial and judgment granting Fry's costs to be in effect, despite a subsequent reversal of a portion of the judgment on which the costs were based; and (3) allowing Fry's to recover delivery charges as costs without competent evidence they were reasonably necessary. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Prior Proceedings

In this action, Apex, a seller of computer equipment, sought to prove that Fry's, a seller of computer and other electronics, engaged in unfair business practices, false advertising, unfair competition, and interference with economic advantage. The matter went to trial, and a jury found in favor of Fry's on all of its legal claims. The court thereafter heard Apex's equitable claims, and, with the exception of a requested injunction on one cause of action, the court found in favor of Fry's. On the one claim in which Apex prevailed, the court granted an injunction preventing Fry's from advertising the single unit price for goods that only came in multiple units.

Following entry of judgment, Fry's sought costs in the amount of $125,769.45. Apex moved to tax costs and in January 2003 the court granted that motion in part, reducing Fry's costs to $44,836 (January 2003 order).

Apex and Fry's both appealed the judgment. This court reversed the jury's verdict in favor of Fry's on Apex's fourth cause of action for interference, based upon instructional error by the court. (Apex Wholesale, Inc. v. Fry's Electronics, Inc. (June 15, 2006, D041383) [nonpub. opn.] (Apex I.) We affirmed the remainder of the judgment. (Ibid.)

Following remand, Fry's brought a motion for summary judgment on the sole remaining cause of action, which the court granted. Apex appealed, and we affirmed the judgment. (Apex Wholesale, Inc. v. Fry's Electronics, Inc. (March 25, 2009, D052103) [nonpub. opn.] (Apex II).)

B. Fry's Memorandum of Costs/Motion To Strike Costs Award

After judgment was entered following the granting of Fry's motion for summary judgment, Fry's filed a memorandum of costs on October 29, 2007 (October 2007 costs memorandum). It was accompanied by a proof of service stating that it was mailed to Apex's counsel on that date. Apex did not oppose the October 2007 costs memorandum, and the court entered an amended judgment, awarding Fry's costs in the amount of $191,079.40.

Over one year later, in November 2008, Apex filed a motion to strike the October 2007 costs memorandum, arguing that the costs had been procured through extrinsic fraud because Apex's counsel was never served with that memorandum of costs. The motion also alleged that Fry's had overstated the amount of costs it incurred, relying on the court's January 2003 order following the original judgment entered in the case, wherein the court reduced Fry's costs from $125,769.45 to $44,836.60. Finally, Apex asserted there were costs claimed in the memorandum of costs that were not recoverable.

Fry's opposed the motion, contending it had served the October 2007 costs memorandum on counsel for Apex. In support of this contention, Fry's included a declaration from its process server, Darrell Cobb, stating under oath that the October 2007 costs memorandum had been timely served by mail.

C. Court's Order on Motion To Strike

In January 2009 the court issued its order on Apex's motion, making the following findings:

"The motion of [Apex] to strike [Fry's] Memorandum of Costs is granted, while the request to set aside the Judgment with amount of costs obtained through extrinsic fraud is denied. The arguments presented at the hearing establish to the Court's satisfaction that no extrinsic fraud occurred. Through its inherent authority to do so, and because of the apparent lack of receipt by [Apex] of the October 29, 2007 cost[s] memo, the Court exercises its discretion and permits [Fry's] to seek costs that were incurred from the date of the remittitur in this case. . . . The Court's January 3, 2003 Order regarding [Fry's] memorandum of costs remains in effect, as the Court of Appeal specifically indicated [in Apex I] that, aside from this Court's instructional error with respect to [Apex's] fourth cause of action, this Court's 'orders [are] affirmed.' " (Italics added.)

D. Post-Remittitur Costs Memorandum/Motion To Strike

Pursuant to the court's order, in February 2009 Fry's filed a post-remittitur costs memorandum (February 2009 costs memorandum), seeking costs in the amount of $5,083.33. A substantial amount of the costs sought were for filing and service of documents. In support of these costs Fry's counsel submitted a declaration stating:

"These filing and messenger costs were reasonably and necessarily incurred because the documents in question were complex pleadings involving substantial legal research and multiple drafts requiring review by multiple persons, and thus were ordinarily not ready for filing and service until the last day that the document could be timely filed and served under the court rules. Consequently, overnight service would not have been timely for these documents, and messenger services were required."

Apex brought a motion to strike the February 2009 costs memorandum on the grounds it was not timely filed, and there was no showing of excusable neglect which allowed the court to extend the time to file the memorandum, because Fry's failed to serve the October 2007 costs memorandum. Apex also asserted that because the Court of Appeal reversed part of the original judgment in Apex I, the January 2003 order awarding Fry's its costs was reversed as well. Finally, Apex objected to the messenger service costs, arguing they were unnecessary and excessive and were incurred "for the benefit and convenience of Fry's, not in the regular furtherance of litigation."

Fry's opposed the motion, arguing Apex had misinterpreted the court's order. Fry's asserted the February 2009 costs memorandum was timely because the court expressly allowed and directed its filing. Fry's also asserted that each of its costs was recoverable.

In May 2009 the court issued its order on Apex's motion to strike/tax costs. The court first found that Fry's "interpretation of the Court's January 29, 2009 Order is correct, and [Apex's] arguments regarding the timeliness of the cost memo at issue and the Court's jurisdiction [are] unpersuasive and an inappropriate motion for reconsideration. [Fry's] submitted the cost memo at issue at this Court's direction and based on the evidence and argument presented by the parties at the hearing on January 16, 2009. Thus, the cost memo is timely."

The court then addressed the recoverability of the costs sought by Fry's. The court found them reasonable and recoverable, with the exception of (1) a reduction of a service of process fee from $338.05 to $189.55; (2) a reduction of other service of process fees from $953.50 to $200; and (3) a denial of $867.20 in travel expenses.

Apex timely appealed the January 2009 and May 2009 orders.

DISCUSSION

I. TIMELINESS OF FEBRUARY 2009 COSTS MEMORANDUM

Apex asserts the February 2009 costs memorandum ordered by the court in its January 2009 order was untimely because (1) it was filed past the 15-day time limit mandated by California Rules of Court, rule 1700(a)(1) ; and (2) Fry's failed to meet the requirements of Code of Civil Procedure section 473 to obtain relief from its failure to serve Apex with the October 2007 costs memo. These contentions are unavailing.

A. Standard of Review

We review a challenge to a trial court's order denying a motion to vacate an order on equitable grounds under the abuse of discretion standard. "The disposition of such a motion rests largely in the discretion of the trial court, and its decision will not be disturbed on appeal unless there had been a clear abuse of discretion. . . . [I]t is generally accepted that the appropriate test of abuse of abuse of discretion is whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered." (In re Marriage of Connolly (1979) 23 Cal.3d 590, 597-598.)[1]

B. Analysis

Courts at any time have inherent, equitable power to grant relief from a judgment or order based upon "extrinsic fraud or mistake," terms given a broad interpretation and cover almost any circumstance by which a party is deprived of a fair hearing. There need be no actual "fraud" or "mistake" in the strict sense. (In re Marriage of Park (1980) 27 Cal.3d 337, 342.) Thus, such relief may be granted where "papers were lost, stolen, forwarded to the wrong person or eaten by the dog." (Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1301 (Sporn).)

Here, the court explicitly found that there was no evidence of extrinsic fraud, i.e., that Fry's prevented Apex from responding to the October 2007 costs memorandum by purposefully failing to serve it with that document. (Sporn, supra, 126 Cal.App.4th at p. 1300.) Rather, it appears from the court's comment concerning "the apparent lack of receipt" of the October 2007 costs memorandum by Apex that it was granting equitable relief based upon extrinsic mistake to allow Apex to respond to that pleading because it had been lost in the mail, lost by counsel for Apex or, at most, negligently served by counsel for Fry's. Thus, the court had the equitable power to strike the October 2007 costs memorandum, allow Fry's to file and serve a new costs memo, and allow Apex to address that document. It is apparent the court, because it could not determine who was at fault, was granting equitable relief to both parties to allow the propriety of the costs memo to be litigated. Thus, the costs memo was not untimely.

II. COURT'S FINDING JANUARY 2003 ORDER REMAINED IN EFFECT

Apex also asserts the court erred in ruling the January 2003 order taxing costs remained a valid adjudication of costs through trial and allowing Fry's to submit a cost memorandum for post remittitur costs because our reversal of one cause of action in Apex I resulted in a reversal of theJanuary 2003 order. This contention is unavailing.

In asserting the January 2003 order was reversed when we partially reversed the judgment in Apex I, Apex relies on Allen v. Smith (2002) 94 Cal.App.4th 1270 (Allen), in which this court reversed a judgment for the defendants, holding the plaintiff's motion for summary judgment should have been granted. However, the award of attorney fees to the defendants was not separately appealed. Thus, we held that we had no jurisdiction to reverse that order: "An appellate court has no jurisdiction to review an award of attorney fees made after entry of judgment, unless the award is separately appealed." (Id. at p. 1284.) However, we held that because " '[a]n order awarding costs falls with a reversal of the judgment on which it is based. . . . Although we cannot reverse the order granting costs and fees, the trial court should do so on remand.' " (Ibid.)

Allen does notassist Apex for several reasons. First, in that case we issued an unqualified reversal, rendering the prevailing party determination in favor of respondents moot. Here, however, the judgment was reversed on only one cause of action, making Fry's still the prevailing party on the remaining claims. A limited reversal does not render a costs award automatically null and void, but rather requires a reconsideration by the trial court of the prevailing party issue. (Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1097; Ventas Finance I, LLC v. Franchise Tax Bd. (2008) 165 Cal.App.4th 1207, 1234.)

Thus, if Apex believed the costs should have been apportioned between the claims on which it did not prevail on appeal and the one that it did, and the January 2003 cost award should have been reduced, it was incumbent upon Apex to make such a request in the first instance to the trial court following remand. If it disagreed with the court's ruling on such an application, it could then challenge that decision on appeal.

However, Apex never challenged the January 2003 order in the trial court and never appealed on that issue. Indeed, Apex affirmatively argued in its motion to strike the October 2007 costs memorandum that that order was still in effect and limited the amount of costs to which Fry's was entitled. Accordingly, Apex has forfeited that issue on appeal. (Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316 [a litigant may not change his or her position on appeal to contradict position asserted in trial court].)

Moreover, the January 2003 order also awarded costs to the individual defendants David Bicknell and Randy Fry, determining the reasonable amount of those costs as being the same awarded to Fry's. Apex never appealed the judgment in their favor or the costs award to them. Thus, regardless of whether Apex prevailed against Fry's in Apex I, the court's award of costs to them and the court's determination of the reasonable amount of such costs, remained in effect. This gave additional grounds for the court to find that the January 2003 order determining the reasonable amount of costs incurred to that date need not be relitigated in the February 2009 costs memorandum.

II. COURT'S AWARD OF POST-REMITTITUR COSTS

Apex asserts that the charges for a messenger service's delivery of documents were improper because they were not supported by competent evidence they were reasonably necessary to the litigation. This contention is unavailing.

A. Standard of Review

Because the costs challenged by Apex were discretionary, we review the court's ruling denying the motion to strike or tax costs for abuse of discretion. (Code Civ. Proc.,  1032, subd. (a)(4); see Perko's Enterprises, Inc. v. RRNS Enterprises (1992) 4 Cal.App.4th 238, 244.) Under Code of Civil Procedure section 1033.5, subdivision (c)(2), " '[a]llowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.' " (Perko's, supra, at p. 244.)

Moreover, on an appeal of a costs determination, we apply the rule that " '[a] judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.' " (Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 266, italics omitted.)

B. Analysis

Apex asserts that because it filed a motion to strike or tax costs, this shifted the burden to Fry's to show the costs incurred were reasonably necessary to the litigation. This contention is unavailing.

"[T]he mere filing of a motion to tax costs may be a 'proper objection' to an item, the necessity of which appears doubtful, or which does not appear to be proper on its face. [Citation.] However, '[i]f the items appear to be proper charges the verified memorandum is prima facie evidence that the costs, expenses and services therein listed were necessarily incurred by the defendant [citations], and the burden of showing that an item is not properly chargeable or is unreasonable is upon the [objecting party].' " (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131.) "[A] party's 'mere statements in the points and authorities accompanying its notice of motion to strike cost bill and the declaration of its counsel are insufficient to rebut the prima facie showing [that the costs were necessarily incurred].' " (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1266, quoting Rappenecker v. Sea-Land Service, Inc., supra, 93 Cal.App.3d at p. 266.) Whether a cost item was reasonably necessary is a question of fact for the court's determination. (Jones v. Dumrichob, supra, at p. 1266.)

Apex does not assert Fry's failed to meet its prima facie burden. Rather, Apex argues Fry's should have produced evidence its costs were reasonable and necessary. However, the burden of proof did not shift to Fry's because Apex's moving papers were not accompanied by any competent evidence to rebut the presumption Fry's costs were reasonable and necessary. Rather, Apex merely asserted, without citation to any legal authority, that such costs were merely "for the benefit and convenience of Fry's."

Further, a review of the costs incurred and awarded by the court demonstrates Apex has failed to meet its burden of proof that the costs were unreasonable. The reasonable cost of messenger services is recoverable, in the discretion of the court. (Code Civ. Proc.,  1033.5, subd. (c)(2); Ladas v. CaliforniaState Auto. Assn. (1993) 19 Cal.App.4th 761, 774.) Fry's counsel's declaration adequately explained the need for the messenger services. Plaintiffs have submitted no evidence to the contrary.

"Determination of whether a cost is reasonable is within the trial court's discretion." (Thon v. Thompson (1994) 29 Cal.App.4th 1546, 1548.) "[T]rial courts have a duty to determine whether a cost is reasonable in need and amount. However, absent an explicit statement by the trial court to the contrary, it is presumed the court properly exercised its legal duty." (Id. at pp. 1548-1549.) On this record, we find no abuse of discretion.

DISPOSITION

The orders are affirmed. Fry's shall recover its costs on appeal.

NARES, J.

WE CONCUR:

BENKE, Acting P. J.

IRION, J.

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[1] Thus, the standard of review is not de novo, as Apex claims in its opening brief.