Pacific Office Automation, Inc. vs The Health Trust et al.

Code of Civil Procedure Section 1033.5(a) sets for the following allowable items as costs:

(1) Filing, motion, and jury fees. (2) Juror food and lodging while they are kept together during trial and after the jury retires for deliberation. (3) (A) Taking, video recording, and transcribing necessary depositions, including an original and one copy of those taken by the claimant and one copy of depositions taken by the party against whom costs are allowed. (B) Fees of a certified or registered interpreter for the deposition of a party or 4

witness who does not proficiently speak or understand the English language. (C)Travel expenses to attend depositions. (4) Service of process by a public officer, registered process server, or other means, as follows: (A)When service is by a public officer, the recoverable cost is the fee authorized by law at the time of service. (B) If service is by a process server registered pursuant to Chapter 16 (commencing with Section 22350) of Division 8 of the Business and Professions Code, the recoverable cost is the amount actually incurred in effecting service, including, but not limited to, a stakeout or other means employed in locating the person to be served, unless those charges are successfully challenged by a party to the action. (C) When service is by publication, the recoverable cost is the sum actually incurred in effecting service. (D) When service is by a means other than that set forth in subparagraph (A), (B), or (C), the recoverable cost is the lesser of the sum actually incurred, or the amount allowed to a public officer in this state for that service, except that the court may allow the sum actually incurred in effecting service upon application pursuant to paragraph (4) of subdivision (c). (5) Expenses of attachment including keeper's fees. (6) Premiums on necessary surety bonds. (7) Ordinary witness fees pursuant to section 68093 of the Government Code. (8) Fees of expert witnesses ordered by the court. (9) Transcripts of court proceedings ordered by the court. (10) Attorney's fees, when authorized by any of the following:(A) Contract. (B) Statute. (C) Law. (11) Court reporter fees as established by statute. (12) Court interpreter fees for a qualified court interpreter authorized by the court for an indigent person represented by a qualified legal services project, as defined in Section 6213 of the Business and Professions Code, or a pro bono attorney, as defined in Section 8030.4 of the Business and Professions Code. (13) Models, the enlargements of exhibits and photocopies of exhibits, and the electronic presentation of exhibits, including costs of rental equipment and electronic formatting, may be allowed if they were reasonably helpful to aid the trier of fact. (14) Fees for the electronic filing or service of documents through an electronic filing service provider if a court requires or orders electronic filing or service of documents. (15) Fees for the hosting of electronic documents if a court requires or orders a party to have documents hosted by an electronic filing service provider.

This paragraph shall become inoperative on January 1, 2022. (16) Any other item that is required to be awarded to the prevailing party pursuant to statute as an incident to prevailing in the action at trial or on appeal. (b) The following items are not allowable as costs, except when expressly authorized by law: (1) Fees of experts not ordered by the court. (2) Investigation expenses in preparing the case for trial.(3) Postage, telephone, and photocopying charges, except for exhibits.(4) Costs in investigation of jurors or in preparation for voir dire. (5)Transcripts of court proceedings not ordered by the court. (c) An award of costs shall be subject to the following: (1) Costs are allowable if incurred, whether or not paid. (2) Allowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.(3) Allowable costs shall be reasonable in amount. (4) Items not mentioned in this section and items assessed upon application may be allowed or denied in the court's discretion.(5)(A) If a statute of this state refers to the award of “costs and attorney's fees,” attorney's fees are an item and component of the costs to be awarded and are allowable as costs pursuant to subparagraph (B) of paragraph (10) of subdivision (a).

A claim not based upon the court's established schedule of attorney's fees for actions on a contract shall bear the burden of proof. Attorney's fees allowable as costs pursuant to subparagraph (B) of paragraph (10) of subdivision

(a) may be fixed as follows: (i) upon a noticed motion, (ii) at the time a statement of decision is rendered, (iii) upon application supported by affidavit made concurrently with a claim for other costs, or (iv) upon entry of default judgment. Attorney's fees allowable as costs pursuant to subparagraph (A) or (C) of paragraph (10) of subdivision (a) shall be fixed either upon a noticed motion or upon entry of a default judgment, unless otherwise provided by stipulation of the parties. (B) Attorney's fees awarded pursuant to Section 1717 of the Civil Code are allowable costs under Section 1032 as authorized by subparagraph (A) of paragraph (10) of subdivision (a).

California Rule of Court, rule 3.1700 provides that “[a] prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of mailing of the notice of entry of judgment. . . The memorandum of costs must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case.” (Cal. Rule of Court, rule 3.1700). The memorandum of costs need not contain invoices, billings, or statements. (Bac v. County of Butte, supra 215 Cal.App.3d at 308; see also Cal. Rules of Court, Rule 3.1700(a)(1) (only verification required)). “Documentation must be submitted only when a party dissatisfied with the costs claimed in the memorandum challenges them by filing a motion to tax costs.” (Id.).

Code of Civil Procedure section 1034(a) provides grounds for the opposing party to contest the costs that a prevailing party seeks. The challenging party bears the burden of demonstrating that the costs are unreasonable or unnecessary. (Adams v. Ford Motor Co., (2011) 199 Cal. App. 4th 1475, 1486; 612; South LLC v. Laconic Limited Partnership, (2010) 184 Cal. App. 4th 1270, 1285). The opposing party seeking to tax costs bears the burden of showing that the costs were not reasonable or necessary. (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773- 74). If items are properly objected to, they are put in issue, and the burden of proof shifts to party claiming the costs at issue. (Id.; See also, Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131).

III. ANALYSIS POA seeks an order striking or taxing eight specific items listed in THT’s October 21, 2025 memorandum of costs that amount to $15,151.05, which include the following:

(1) Attachment 1G - $180.00 for filing costs not reasonably related to the litigation; (2) Attachment 4E - $1,275.19 for travel costs, including attorney and client meals, not authorized by statute and/or reasonably related to the litigation; (3) Attachment 15 - $445.00 for costs related to the attempted, and failed, service of deposition and discovery process upon Garret Dettner which POA was willing to accept as Dettner’s counsel, and which POA eventually did accept electronically; (4) Attachment 15 - $2,326.02 for e-filing costs issued by a vendor not authorized to file for Santa Clara County Superior Court, and thus not authorized by statute; (5) Attachment 15 - $340.79 for a late fee charged by a court reporter hired by THT, with no indication as to the necessity of the late fee to the litigation; (6) Attachment 15 - $6,558.91 for hosting fees not ordered by the Court (and thus not required by statute), and not otherwise necessary to the conduct of the litigation; (7) Attachment 15 - $94.00 for a fee refunded to THT; and (8) Attachment 15 - $3,961.65 for the portion of mediator fees that THT agreed to pay for the December 2022 mediation. (POA’s motion, at p.2).

It is uncontested that under Code of Civil Procedure section 1033.5, a prevailing party is entitled to recover enumerated allowable costs. However, POA contests the total amount of costs, $47,545.24 that THT seeks on the grounds that the eight items listed above are either not statutorily recoverable or reasonably necessary for the conduct of litigation. (POA’s motion, at p. 6). POA asserts that the court may in its discretion strike unenumerated costs under section 1033.5(c)(4) and for enumerated or discretionary costs, “[a]ny allowable cost must be ‘reasonably necessary to the conduct of litigation rather than convenient or beneficial to its preparation,’ and reasonable in amount.”” (POA’s motion, p. 6, citing Bender v.

County of L.A. (2013) 217 Cal.App.4th 968, 990 (quoting Cal. Code Civ. Proc. § 1033.5(c)). Accordingly, POA argues that THT’s request for $47,545.24 is statutorily barred, excessive, or not reasonably necessary to the conduct of litigation and seeks a reduction of at least $15,151.05, which would bring THT’s total cost to $32,394.18. (Id.).

The Court consider each of the eight items presented by POA:

(1) Attachment 1G - $180.00 for filing costs not reasonably related to the litigation, POA asserts that THT’s motion to compel and ex parte application for an order shortening time and stipulation to continue the trial were not reasonably necessary. POA argues that THT’s motion was an attempt to engage in a fishing expedition on the fraud-based cross claim and points to the fact that the Court denied the motion. The parties did not resolve the discovery issue in litigation. As for the ex parte application to continue the trial date, POA requests the motion was unnecessary as POA stipulated to the continuance.

POA requests judicial notice of the August 16, 2022 order and Declaration of Thomas A Woods in relations to THT’s motion for attorney’s fees on October 21, 2025. Evidence Code section 452, subdivision (d), states that the court may take judicial notice of “[r]ecords of any court of this state.” This section of the statute has been interpreted to mean that the trial court may take judicial notice of the existence of the court’s own records. Evidence Code section 452 and 453 permit the trial court to “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.” (People v.

Woodell (1998) 17 Cal.4th 448, 455). Accordingly, Defendant’s request for judicial notice of the August 16, 2022, Minute Order by the Honorable Socrates Manoukian is GRANTED, but only insofar as the court takes judicial notice of their existence, not for the truth of matters asserted therein. As to the request for judicial notice of the October 21, 2025 Declaration of Woods, generally, the court may not take judicial notice of discovery responses. (See TSMC North America v. Semiconductor Mfg. Intern.

Corp. (2008) 161 Cal.App.4th 581, 594).

However, the Court may take judicial notice of discovery responses "to the extent ‘they contain statements of the [party] or his agent which are inconsistent with the allegations of the pleading before the court." (Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 477 (quoting Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 605)). "But in doing so, ‘[t]he hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of affidavits, declarations, depositions, and other such material which was filed on behalf of the adverse party and which purports to contradict the allegations and contentions of the plaintiff.'" (Id.).

The court finds it unnecessary to consider this October 21, 2025 Declaration in resolving the motion to tax in conjunction with THT’s motion for attorney’s fees. (See Duarte v. Pacific Specialty Insurance Company (2017) 13

Cal.App.5th 45, 51, fn. 6—denying request where judicial notice is not necessary, helpful or relevant). Consequently, Defendant’s request for judicial notice of the Wood Declaration dated October 21, 2025 is DENIED.

THT argues that the results of the motions filed is not a prong in obtaining costs. (THT’s opposition, p. 4). THT asserts the motion to compel was needed to enforce its discovery rights and that the court struck down POA’s fishing expedition arbitration. (Id.). Further, the ex parte application, even if stipulated was necessary to ensure the court could rule before trial. (Id., at p. 5). In its reply brief the POA asserts that the THT did not meet its burden to show these costs were reasonably necessary. (POA Reply, p. 4-5).

Here, the Court finds the $180.00 incurred for the motion to compel and ex parte application to continue the trial is a reasonable cost in litigation. Regardless of the Court’s denial of the motion to compel was without prejudice and there was no finding that the motion was frivolous or made in bad faith. As for the ex parte application, regardless of a stipulation, parties must seek permission from the Court to continue a trial date, so that application qualifies as a reasonable cost. Filing fees are recoverable under section 1033.5(a)(1). POA does not meet its burden of showing that the cost incurred for filing was not proper.

(2) Attachment 4E - $1,275.19 for travel costs, including attorney and client meals, not authorized by statute and/or reasonably related to the litigation. POA argues that counsel’s meals should not count as a recoverable cost for deposition related travel expenses. The cost of meals at issue is $124.93. (POA motion, p. 7-8, citing Ladas v. Cal. State Auto Ass’n (1993) 19 Cal.App.4th 761, 774). POA argues that THT attempts to hide that several of the expenses grouped into the “travel” column of this attachment are meal related that are not allowable costs under Code of Civil Procedure and that THT cannot justify this expense as reasonably necessary.

Lodging and meal expenses re recoverable trial costs subject to the court’s discretion. In Ladas, the court held that meal expenses while attending local depositions were not recoverable, although it was argued that “[l]lawyers must eat whether they are conducing litigation or not.” (Ladas, supra, (1993) 19 Cal.App.4th at p. 774). Meal expenses incurred by attorneys while attending out-of- town depositions, on the other hand, have been held to be recoverable. (Howard v. American National Fire Ins.

Co. (2010) 187 Cal.App.4th 498, 541 [“Although the incurring of meal expenses may be merely convenient to an attorney attending a local deposition, meal expenses may be reasonably necessary where an out-of-state attorney must travel to the deposition”]; Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 72 [distinguishing local meal expenses from meal expenses incurred while traveling]). In Doe v. Dep’t. of Children & Family Servs., the court held that meal expenses incurred during trial that was approximately 90 miles from defense counsel’s office was recoverable and awarding cost was not an abuse of discretion. (Doe v.

Dep’t. of Children & Family Servs. (2019) 37 Cal.App.5th 695).

POA also disputes costs related to a deposition of Steve Hummel in San Francisco, California, which is approximately a 90-minute drive from counsel’s office in Sacramento. POA attacks the lodging and parking fees of $378.99 incurred as not necessary to litigation, but “merely convenient or beneficial” to conduction a deposition. (Id., at p. 7-8).

Similarly, POA challenges costs for the deposition of Garret Dettner, which was a stipulated remote appearance. Despite a remote appearance, TCT incurred significant travel expenses

including mileage and lodging in Bend, Oregon. POA also disputes the inflated cost of the daily lodging as excessive and not reasonably necessary for litigation.

TCT argues that the $1,275.19 incurred for deposition travel was reasonably necessary to the conduct of the litigation, rather than being merely beneficial. (TCT’s opposition, at p. 5). TCT asserts that an Oregon-based associate covered the deposition in person, while lead counsel appeared remoted, which was a cost-conscious approach. TCT explains that documents produced in the deposition required a person to be personally present. (Id.). TCT also asserts that the room rental expense associated with the Bend deposition was to cover of the actual room where the deposition actually took place. (Id.).

POA argues in its reply brief that an in person deposition was unnecessary and that the TCT attorney failed to produce further documents. (POA’s Reply, p. 6). POA contends that TCT did not need to send a second attorney to attend in person while lead counsel appeared remotely and thus assert the cost is unrecoverable.

Here, the court finds the deposition travel expense and deposition room rental in Bend, Oregon as a reasonably necessary cost for litigation. As for the travel cost of Mr. Hummel from Sacramento to Francisco, without further details as to the need for overnight lodging is more of a cost of convenience rather than necessity and will strike the $378.99. The Court in its discretion also strikes the meal cost of $124.93 that was incurred by the local attorney handling the deposition in Bend. The total amount in this section that the Court will strike is $503.92.

(3) Attachment 15 - $445.00 for costs related to the attempted, and failed, service of deposition and discovery process upon Garret Dettner which POA was willing to accept as Dettner’s counsel, and which POA eventually did accept electronically. (POA’s motion, at p. 9). POA points out that THT attempted personal service and failed three times, resulting in $445.00 in cost. While fees related to depositions are allowable, POA contends the cost was not reasonably necessary because POA was willing and ultimately accepted service on behalf of Garret Dettner, who POA represented at the time. POA contends that THT’s decision to attempt personal service rather than e-mail service was not reasonable or efficient.

In response, THT argues that POA initially refused to cooperate with, which made the service fee a necessity. (THT Opposition, p. 1). THT contends that POA omits the fact that it repeatedly refused to provide Mr. Dettner’s residential address and availability for deposition, which forced THT to conduct investigations into Mr. Dettner’s location and attempt service. (Id.; Declaration of Corey M. Day, at p. 2; Exhibit B). THT contends that service was required given POA’s obstruction. Even though POA ultimately accepted electronic service for Mr. Dettner, THT still incurred the cost. POA states that THT did not ask POA to accept electronic service or provide Mr. Dettner’s location. (POA’s reply brief, at p. 7).

In general service of process fees are recoverable under section 1033.5(a)(4). Given that this Garett Dettner is a party and witness in this matter, service is reasonably necessary to conduct litigation. Given there was a dispute on accepting service, the court will not tax this cost.

(4) Attachment 15 - $2,326.02 for e-filing costs issued by a vendor not authorized to file for Santa Clara County Superior Court, and thus not authorized by statute. POA contends that fees for electronic filing or service are recoverable if ordered by the Court. (POA’s motion, at p. 9).

POA contends that Santa Clara County requires the use of Odyssey e-file California for efiling, but that THT used an unapproved vendor listed as “Dauntless Legal Services LLC,” and is thus not approved and recoverable. (Id., at p. 9-10). THT disputes POA representation and asserts that the electronic filing is required or ordered. (THT’s Opposition, p. 3). THT also asserts that Dauntless Legal Services LLC used Green Filing’s portal, which is expressly identified in the Odyssey e-filing platform and that it has complied with efiling. THT asserts that none of the filings were rejected, flagged, or returned. (Id.).

Section 1033.5(a)(14) allows for electronic filing fees when required or ordered by the court and subdivision (c)(4) allows for the court to determine awarding the cost. Here, the court requires efiling on the Odyssey platform. It is undisputed that filings were not rejected, flagged, ore return, there is no discussion that the fees using this particular vendor, Dauntless Legal Services was excessive or unreasonable. It is undisputed that efiling is a reasonable and necessary cost in litigation. The Court will not tax this amount.

(5) Attachment 15 - $340.79 for a late fee charged by a court reporter hired by THT, with no indication as to the necessity of the late fee to the litigation. POA disputes the cancellation costs for “reporter late cancellation same day fee” totaling $340.79 on April 3, 2024 does not include any explanation and support as to why it was reasonably necessary and should be taxed. (POA’s motion, at p. 8).

In response, THT asserts that POA delayed in producing a deponent the night before the deposition, which resulted in late-cancellation of the court reporter. (THT’s opposition, at p. 2). THT contends that the late fee was not incurred for a lack of diligence, but rather unavoidable due to POA’s late response the night before the scheduled deposition. (Id.; Declaration of Corey M. Day, at p. 2; Exhibit A).

POA asserts that the delay was THT’s failure to verify information that POA already provided. POA offered a mutually agreeable date for deposition before THT made its first request to verify the same date that POA had already offered. (Declaration of Day; Exhibit A; POA’s reply, at p. 9). “THT waited until 4:53 p.m. to verify an available deposition date that POA had already presented (and verified) an hour earlier. THT’s own delay in rescheduling thus appears to have been the reason for the cancellation fee it paid.” The fee was per contract rather than for an actual court reporter fee. (Id.).

Here, it appears the delay and miscommunication of both parties resulted in a contractual penalty for late-cancellation of a court reporter. The Court exercises its discretion and will tax this cost.

(6) Attachment 15 - $6,558.91 for hosting fees not ordered by the Court (and thus not required by statute), and not otherwise necessary to the conduct of the litigation. POA disputes THT’s request to recover $21,799.48 in “other “ costs. (POA motion, at p. 10). Specifically, POA points to several entries for “Casepoint Hosting” and “EPIQ – Relativity” hosting for document intensive cases, POA asserts that section 1033(a)(5) allows fees for hosting electronic documents, but only if the Court requires a party to do so. (Id.). POA asserts that there was no such order in this case and that the specific subsection providing for document hosting fee became inoperative as of January 1, 2022. (Id.). POA contends that THT has failed to show why it should be awarded hosting fees or associated fees as a discretionary cost. POA estimates

that 5,000 pages of discovery is “. . .a shockingly small number of pages for the costs THT now seeks in a matter resulting in a $40,000 damages award.” (Id. at p.10).

It is undisputed that the hosting fee falls under the discretionary authority of the court. (THT’s opposition, at p. 7). THT contends that electronic document hosting is not only common, but necessary in this type of multi-year litigation. (Id.). The figure represents monthly fees that were incurred during the pendency of this case. The hosting fees to store custodial emails and other ESI responsive to discovery started on February 28, 2021 to July 31, 2025, for a 54 month period at a rate of approximately $121.00 per month. (Declaration of Day, at p. 3). THT asserts that the hosting fees were required to respond to POA’s discovery demands. (Id.). The volume required and necessitated management and was not discretionary or convenience based. (Id.). THT argues that POA now seeks to minimize the scope of discovery at issue.

POA asserts that THT does not identify the amount of data hosted or the nature mutinied to justify 54 months of continuous hosting. (POA’s reply brief, at p. 8).

Here, the Court finds that given the length of time and discovery, electronic storage costs of approximately $121.00 per month is reasonably necessary to respond to discovery and prepare for litigation. Given the landscape of efilings and electronic service, which both parties utilized in this matter, the Court finds this a reasonable cost. The statute does not require a detailed analysis of the cost, and TCT identifies the cost to store emails and ESI related in the matter. However, the Court notes that TCT accepted POA’s 998 offer on March 21, 2025 and the 998 Judgment was entered into the record on June 23, 2025 (Judgment).

Therefore, the Court exercises its discretion to tax the additional three months (April to July 2025) that hosting fees were incurred as parties reached a settlement and judgment was entered. The three months calculated at $121.00 per month amounts to $363.00 that will be taxed.

(7) Attachment 15 - $94.00 for a fee refunded to THT. POA challenged the September 10, 2020 CourtCall fee in the amount of $94.00 on the grounds that billing records indicate that this fee was refunded to StoelRives LLP on September 22, 2020. The Court will tax the full amount of this charge in the amount of $94.00.

THT contends that the refund was for a different charge and that on September 10, 2020, THT did not fact incur a CourtCall fee. (THT Opposition). POA asserts that Stoel Rives’s billing records indicate that a CourtCall cost associated with identifier *10845424 was charged to THT’s file on September 10, 2020, and that it was refunded on September 22, 2020 and THT fails to provide any information on how the cost was misinterpreted.

Here, the Court finds that THT does not account for how the refund does not apply in this matter. Court calls are a courtesy for parties and is more of cost of convenience and expediency rather than necessity in cases. The Court exercises its discretion and will tax the $94.00 fee.

(8) Attachment 15 - $3,961.65 for the portion of mediator fees that THT agreed to pay for the December 2022 mediation. (POA’s motion, at p. 10). POA challenges this first round of mediation cost on the grounds that the fee is not expressly allowed under section 1033.5(a)(1)- (16) and that parties agreed to split the cost of the mediator in this action. (Id.; Declaration of Kaltsas; Exhibit C).

THT contends that Court may exercise its discretion to award the mediation cost. THT contends that a fee-splitting agreement does not preclude a prevailing party from recovering discretionary costs. (THT’s opposition, at p. 8; citing Gibson v. Borbroff (1996) 49 Cal.App.4th 1202-1209). THT asserts that the mediation occurred in the pendency of the litigation as part of the parties efforts to resolve the matter before trial.

POA responds that “[t]he Court of Appel has explicitly held that in cases where parties “agree to share costs during litigation, the courts will enforce those agreements as written.” (POA’s Reply, at p. 9, citing Anthony v. Li (2020) 47 Cal.App.5th 816, 824 [Citation]).

It is uncontested that the parties agreed to share the initial mediation fee in this matter. While the statute may not bar recovery, the agreement reflects a meeting of the minds of the parties to efficiently and conveniently agree to mediation and its cost. The initial mediation did not resolve the matter, rather, the parties continued to engage in litigation and only resolved after judgment was entered on June 23, 2025, after THT accepted POA’s 998 Offer. Based on the agreement early on in the case, subsequent litigation that reflected the mediation agreement early on was convenient method to agree to mediation, but not necessary, the Court exercises its discretion and will tax the full amount of $3,961.65 of the December 22 mediation fee.

IV. CONCLUSION Based on the foregoing, the Court GRANTS costs, but DENIES the total amount requested by THT. The total cost requested of $47,545.24 less the $5,263.36 that the court taxes, results in costs in the amount of $42,281.88. The Court will prepare the formal Order.

LINE #2: MOTION FOR ATTORNEYS’ FEES BY DEFENDANT/CROSS-COMPLAINANT THE HEALTH TRUST

I. BACKGROUND On October 21, 2025, Defendant The Health Trust (“THT”) filed a Motion for Attorney’s Fees that was accompanied by a proof of service via hand delivery on that same day. Defendant/Cross-Complaint THT seeks attorney’s fees in the amount of $822,311.24 and costs in the amount of $45,545.24 for a total of $869,886.48 pursuant to Code of Civil Procedure sections 1032 and 1033.5, Civil Code section 1717, and Rule of Court, rule 3.1702, and on the grounds that it is the prevailing party.

Plaintiff/ Cross-Defendant Pacific Office Automation, Inc. (“POA”) filed Opposition on October 30, 2025. Defendant THT filed a Reply brief on November 5, 2025. The original hearing date for the motion for attorney’s fee was set for November 13, 2026. On that date, the Honorable Shella Deen continued the hearing to April 30, 2026 to be heard together with the motion to tax cost. On April 30, 2026, the court continued the hearing on both motions to July 30, 2026.

On March 20, 2025, POA served THT with a Code of Civil Procedure section 998 Offer (“998 Offer”) in the amount of $40,000.00, which THT accepted. (THT motion, at p. 7). The judgment was recorded on June 23, 2025. This resolution was reached after five active years of litigation involving substitutional discovery, substantive discovery motions, and mediation. (Id.). THT asserts that due to the length and involvement of litigation, THT incurred substantial attorney’s fees and costs. (Id.). THT also asserts that the agreement did not exclude attorney’s fees and cost. (Id., at p. 8).

THT cites to the relevant portion of the 998 Offer:

3. To the extent permissible under the terms of the contract governing this dispute, POA will pay the reasonable attorneys’ fees and costs incurred by THT in connection with this action and incurred up until the time of this Offer, with the legal availability and reasonableness of such fees to be determined by the Court upon a fully-noticed Motion, which fees shall be incorporated into the Judgment described in Paragraph 1. (Id., at p. 8; 998 Judgment).

The Court has carefully reviewed the Defendant Health Trust’s notice of motion (totaling 5 pages); memorandum of points and authorities (totaling 23 pages); Declaration of Thomas Woods in support of the defendant’s moving papers with Exhibits A – K attached (totaling 546 pages); Memorandum of Costs (totaling 17 pages); Plaintiff/Cross-Defendant’s Opposition (totaling 19 pages); Plaintiff/Cross-Defendant’s Request for Judicial Notice in Support of its opposition (totaling 607 pages pages); Declaration of Chris Kaltsas in support (totaling 400 pages); Defendant Health Trust’s Reply brief (totaling 13 pages); and the pleadings.

II. LEGAL STANDARD A. CODE OF CIVIL PROCEDURE SECTION 1032(A) Pursuant to Code of Civil Procedure section 1032(a)(4), “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” Further, section §1032 (a)(4) provides definitions of “prevailing party,” including “the party with a net monetary recovery.” “Courts have consistently held the prevailing party for the award of costs under section 1032 is not necessarily the prevailing party for the award of attorney’s fees in contract actions under section 1717.” (Sears v.

Baccaglio (1998) 60 Cal.App.4th 1136, 1142). “The definition of prevailing party under section 1717 thus differs significantly from section 1032.” (Id.; see also Zintel Holdings LLC v. McLean (2012) 209 Cal.App.4th 431, 438; PNEC Corp. v. Meyer (2010) 190 Cal.App.4th 66, 70 n.2 [“We recognize that the “prevailing party” inquiries under Civil Code section 1717 and Code of Civil Procedure section 1032 are distinct.”], overruled in part on other grounds by DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 979; Goodman v.

Lozano (2010) 47 Cal.4th 1327, 1335 n.3 [“we reject their contention that we must construe section 1032(a)(4) in light of Civil Code section 1717.”]). Section 1032, defines the prevailing party to include “a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant.” (Code of Civ. Proc, §1032(a)(4)).

B. CIVIL CODE SECTION 1717 Civil Code section 1717 provides, in part, “[i]n any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” (Civ.

Code §1717(a)). The “prevailing” party is the party who recovered greater relief in the action on the contract. (Civ. Code §1717(b)(1)). Under section 1717, “the court is given wide discretion in determining which party has prevailed on its cause(s) of action. Such a determination will not be disturbed on appeal absent a clear abuse of discretion.” (Smith v. Krueger (1983) 150 Cal.App.3d 752, 756–757).

However, Civil Code section 1717(b)(2) provides in pertinent part: “Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.” (emphasis added).

C. REASONABLE ATTORNEY’S FEES In determining reasonable attorney’s fees, the fee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095; Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154; Margolin v. Reg’l Planning Comm’n (1982) 134 Cal.App.3d 999, 1004 (“[A] computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.”)).

In making this calculation, the reasonable hourly rate is the “prevailing rate for private attorneys in the community” handling litigation of the same type. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133). The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. (Id. at p. 1132; PLCM Group v. Drexler, supra, 22 Cal.4th at p. 1095); Serrano v. Priest (1977) 20 Cal.3d 25, 49 [discussing factors relevant to proper attorneys’ fees award.]).

Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. (Id. at 48, fn. 23). The factors considered in determining the modification of the lodestar include “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award.” (Mountjoy v.

Bank of Am. (2016) 245 Cal.App.4th 266, 271). In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence. (Premier Medical Management Systems, Inc. v. California Ins. Guaranty Assoc. (2008) 163 Cal.App.4th 550, 564). General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice. (Id.).

III. ANALYSIS THT asserts that section three of the contract expressly provides the right to seek attorney’s fees. (THT’s motion, at p. 8). THT also argues that when a 998 agreement is silent as to costs or fees, contractual or statutory attorney fees are recoverable in addition to the amount of the accepted offer. (Code of Civ. Proc. §1033.5(a)(10); Ritzenthaler v. Fireside Thrift Co. (2001) 93 Cal.App.4th 986, 991; Engle v. Copenbarger & Copenbarger (2007) 157 Cal.App.4th 165, 169). THT argues that “POA failed to expressly exclude fees in its Offer in reference to THT’s claims and “money damages.”

In fact, the Offer and Judgment expressly reserved the right for THT’s fee motion.” (THT’s motion, at p. 12; citing Declaration of Woods, Exhibit E, Judgment, ¶ 3). THT provides declaration of its counsel Thomas Woods in support of its attorney’s fees. (Id., at p. 18; Declaration of Woods; Exhibit F). THT seeks a range of fees: Mr. Woods, a partner at Stoel Rives LLP, charged between $550.00 and $800.00 per hour from 2020 to 2025. (Id., at p. 19; Declaration of Woods); associate attorneys Corey Day and Chloe Fisher, and paralegal Rebecca Lerma have hourly rates between $290.00 and $535.00. (Id.).

THT states that the rates are withing range of market rates with similar skills and experience in California. THT represents significant time, attention, and labor was expended on this case, which resulted in nearly five years of litigation. THT asserted that it ultimately prevailed and obtained a judgment in its favor. The attorney’s fees amount of $822,311.24 and does not include fees for vacating, enforcing, and pursuing an entry of the final judgment. (Id., at p. 20). THT asserts that its fees are inextricably intertwined with the predominant breach of contract claim.

THT argues that POA cannot claim mistake to cure to the language of the Offer.

In its opposition, POA asserts that POA voluntarily dismissed its breach of contract claim, which in essence bars THT from seeking attorney’s fees under Civil Code section 1717. (POA’s opposition, at p. 5). POA asserts that pursuant to Civil Code section 1717(b)(2) there is no prevailing party when the contract claim is voluntarily dismissed or dismissed pursuant to settlement. (Id.). Even if THT is entitled to fees, which POA contends THT is not, POA asserts that the attorney’s fees requested is not reasonable as its billing records do not supports its extraordinary request for attorney’s fees amounting to more than twenty times the damages as issue. POA notes that on March 21, 2025, less than a week from trial, THT filed a signed 998 Offer without conferring with POA. (Declaration of Kaltsas; POA opposition, p. 6). POA found that the proposed judgment did not reflect the terms of

the offer and objected and filed its own proposed judgment. THT filed ex parte papers to move along its judgment, POA filed a request for dismissal of its complaint with prejudice, along with a notice of entry of dismissal and proof of service in accordance with the March 28, 2025 Offer. (POA opposition, at p. 7). On May 29, 2025, the Court vacated a previously entered judgment and ordered POA to prepare a judgment that mirrored the language of the Offer that was accepted. POA provided the updated judgment that was entered on June 18, 2025. (Declaration of Wood, Exhibit E; POA opposition, p. 7).

POA asserts that “[u]nder the American rule, each party to a lawsuit ordinarily pays its own attorney fees. [Citation.]” (Mountain Air Enters., LLC v. Sundowner Towers, LLC (2017) 3 Cal. 5th 744, 751). POA points out that “[e]xcept as attorneys’ fees are specifically provided for by statute,” fees are “left to the agreement, express or implied, of the parties.” Cal. Code Civ. Proc. § 1021. Section 1717(b)(2), in turn, requires that parties bear their own attorney fees when a defendant in a contract action prevails by settlement or voluntary dismissal. (Riverside Mining Ltd. v.

Quality Aggregates (2024) 104 Cal.App.5th 269, 278–79). (POA’s opposition, at p. 7). POA contends that THT cannot identify a basis of obtaining attorney’s fees. THT concedes that the Image Management Contract at issue does not authorize attorney’s fees, and the only basis is under section 1717, which specifically bars fees for settled or voluntarily dismissed contract claims. POA emphasizes that section 1717(b)(2) “reflects a determination that. . . parties bear their own attorney fees. . . where a defendant in a contract action prevails by voluntary dismissal.” (Riverside Mining Ltd. v.

Quality Aggregates (2024) 104 Cal.App.5th 269, 278). Moreover, it encourages parties “to dismiss pointless litigation. . . rather than maintain it merely to avoid liability for another party’s attorney fees.” (Ford Motor Credit. v. Hunsberger (2008) 163 Cal.App.4th 1526,1531). Section 1717(b)(2) applies with equal force to settlements reached pursuant to CCP § 998, such as this one. (See Riverside Mining Ltd., supra, 104 Cal.App.5th at p. 278). Indeed, Section 1717(b)(2) bars fees even when plaintiffs voluntarily dismiss their breach of contract claims during trial. (See, e.g., Shapira v.

Lifetech Resources, LLC (2018) 22 Cal.App.5th 429, 432). (POA’s opposition, at p. 10).

In response, THT seeks the court to enforce the terms of the offer under section 664.6 and that the 998 Offer is a stipulated or consent judgment. (THT’s motion to enforce, at p. 12-13). THT argues that the 998 clearly provides for THT to pursue attorney’s fees. “POA knows—or should know and THT knows, that the law is clear when it comes to attorneys’ fees based on the fee clause at issue in this case—a unilateral clause that does not apply to claims “arising out of the” purported contract turned bilateral by Civil Code section 1717. (Xuereb v.

Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1341). That is because “tort action for fraud arising out of a contract is not, however, an action ‘on a contract’ within the meaning of [Civil Code § 1717].” (Stout v. Turney (1978) 22 Cal.3d 718, 730). The exception to that rule being when the attorneys’ fees clause at issue is broad enough to encompass litigating tort claims and recovery is afforded under Code of Civil Procedure section 1021. . .” (THT’s motion to enforce, p. 14-15). THT argues that the 998 agreement must have been intended to require judgment to be entered in THT’s favor of the contract claims, otherwise the fee motion that POA expressly invited would have no legal basis. (Id.).

Alternatively, THT argues that POA is estopped based on detrimental reliance of the 998 Offer.

“Under California law, ‘each party to a lawsuit must pay its own attorney fees unless a contract or statute or other law authorizes a fee award.’” (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 237; see Code Civ. Proc., § 1021).

Code of Civil Procedure section 1021 states: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” Here, the court finds defendant THT’s right to attorney’s fees is governed by two agreements and a statute, Civil Code section 1717. The most recent agreement is the 998 Offer itself and, in particular, the language cited above:

To the extent permissible under the terms of the contract governing this dispute, POA will pay the reasonable attorneys’ fees and costs incurred by THT in connection with this action and incurred up until the time of this Offer, with the legal availability and reasonableness of such fees to be determined by the Court upon a fully-noticed Motion, which fees shall be incorporated into the Judgment described in Paragraph 1.

POA’s agreement and thus its obligation to pay the reasonable attorneys’ fees and costs incurred by THT in connection with this action, up until the time of the 998 Offer (March 20, 2025), is expressly limited “to the extent permissible under the terms of the contract governing this dispute.” In turn, the contract governing this dispute is the Image Management Contract (“IMC”), attached as Exhibit A to the FAC. Section (3) of the General Terms & Conditions of the IMC states, in relevant part: “If customer [THT] defaults in the payment of the purchase price or any other obligation as provided herein, Customer [THT] agrees to pay to POA . . . all of POA’s related attorney’s fees and collection costs, even if no suit or action is filed.”

Thus, this court must determine to what extent an award of attorney’s fees is permissible under the above term of the IMC. By its terms, this provision of the IMC only provides attorney’s fees to POA, but Civil Code section 1717, subdivision (a), makes this provision reciprocal. “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”

Thus, an award of attorney’s fees to THT is permissible if the following conditions are met: “There was an action on the contract; the contract provided that fees incurred to enforce the contract be awarded to one of the parties (in this case, [POA]); and [THT]—who recovered greater relief in the action—clearly was the party who prevailed on the contract.” (Wong v. Thrifty Corp. (2002) 97 Cal.App.4th 261, 265).

Here, first of all, the action [POA’s FAC] was on the contract. (See Request for Judicial Notice in Support of Pacific Office Automation, Inc.’s Opposition to Defendant and Cross-Complainant The Health Trust’s Motion for Attorneys’ Fees, Exh. A. The request for judicial notice of this exhibit is GRANTED pursuant to Evidence Code, section 452, subdivision (d)). “[F]undamentally, ‘California courts liberally construe the term “on a contract” as used within section 1717. [Citation.] As long as the action “involve[s]” a contract it is “on [the] contract” within the meaning of section 1717.” (Hjelm v.

Prometheus Real Estate Group, Inc. (2016) 3 Cal.App.5th 1155, 1168). The court is not persuaded by POA’s argument that the subject action was not “on the contract” because THT filed a cross-complaint with claims for fraud. THT’s cross-complaint included a cause of action for false promise including a promise that “POA would supply said office equipment and software for a total monthly price.” (See Request for Judicial Notice in Support of Pacific Office Automation, Inc.’s Opposition to Defendant and Cross- Complainant The Health Trust’s Motion for Attorneys’ Fees, Exh.

B. The request for judicial notice of this exhibit is GRANTED pursuant to Evidence Code, section 452, subdivision (d)). In the court’s view, such a claim “involves” the IMC, in the sense that the alleged fraud arises out of, is based upon, or relates to the IMC by seeking to define or interpret its terms or to determine or enforce a party's rights or duties under the agreement. (See Eden Township Healthcare Dist. v. Eden Medical Center (2013) 220 Cal. App. 4th 418, 427—“An action (or cause of action) is ‘on a contract’ for purposes of section 1717 if (1) the action (or cause of action) ‘involves’ an agreement, in the sense that the action (or cause of action) arises out of, is based upon, or relates to an agreement by seeking to define or interpret its terms or to determine or enforce a party's rights or duties under the agreement. . . ”).

Crosscomplaint aside, there can be no question that POA’s complaint and FAC are actions “on a contract.”

Secondly, the plain language of the IMC provides that attorney’s fees incurred to enforce the contract be awarded to POA.

Finally, Civil Code section 1717, subdivision (b), aids the court in determining who is the party prevailing on the contract. That section states:

(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.

(2) Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.

POA did not recover anything in the action on the contract so it is the court’s finding that THT is the party prevailing on the contract. POA contends the court cannot reach such a result because section 1717, subdivision (b)(2), precludes such a finding. POA notes that on March 28, 2025, 3:21pm, the court clerk entered dismissal of POA’s [first amended] complaint as POA had filed a request for dismissal. (See Request for Judicial Notice in Support of Pacific Office Automation, Inc.’s Opposition to Defendant and Cross-Complainant The Health Trust’s Motion for Attorneys’ Fees, Exh. G. The request for judicial notice of this exhibit is GRANTED pursuant to Evidence Code, section 452, subdivision (d)).

In the court’s opinion, section 1717, subdivision (b)(2), is inapplicable here because the voluntary dismissal of the FAC by POA occurred subsequent to THT’s acceptance of the 998 Offer. In the court’s opinion, the timing is significant.

“‘The goal of contractual interpretation is to determine and give effect to the mutual intention of the parties. [Citations.]’ [Citation.] Thus, ‘a “court's paramount consideration ... is the parties' objective intent when they entered into [the contract].” [Citations.]’ [Citation.] ‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ [Citation.] ‘“If a contract is capable of two constructions courts are bound to give such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect. . .”. [Citations.]’ [Citation.]” (Khavarian Enterprises, Inc. v. Commline, Inc. (2013) 216 Cal.App.4th 310, 318 [156 Cal. Rptr. 3d 657]).

(Brown v. Goldstein (2019) 34 Cal.App.5th 418, 437-438; emphasis added).

In the court’s opinion, the 998 Offer’s provision concerning the payment of attorneys’ fees would be rendered illusory if POA’s dismissal is given effect. In following the legal principle that a contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, the court interprets the 998 Offer to imply that a determination of the availability of fees is to be made at the time the 998 Offer was made and accepted, i.e., prior to dismissal of the action. In doing so, the court reaches the conclusion that THT shall be entitled to reasonable attorneys’ fees as the party prevailing on the contract.

In determining the reasonableness of attorney fees the court considered the lodestar factors set forth including the novelty and difficulty of the issues in the matter, the skill of the attorney, the extent to which the nature of litigation

precluded other employment by the attorneys, and contingent ensuring that the amount awarded is not arbitrary. Litigation involved multi-parties and multi-causes of actions that spanned for approximately five years. Parties engaged in extensive discovery, including party deposition, expert retention, extensive motion practice, two mediations, and trial preparation. THT seeks attorney’s fees in the amount of $822.311.24. (Declaration of Thomas Woods in Support of Defendant/ Cross-Complainant The Health Trust’s Motion for Attorney’s Fees ¶31).

POA disputes the charges and provides specific items challenged with arguments in Exhibit D that is attached to the Declaration of Kaltsas (Declaration of Kalstas, Exhibit D, p. 226-264).

One point of contention is whether THT is entitled to recover for its attorney’s fees related to its cross-complaint. Both parties cite Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129 (Reynolds) where the court wrote, “Where a cause of action based on the contract providing for attorney's fees is joined with other causes of action beyond the contract, the prevailing party may recover attorney's fees under section 1717 only as they relate to the contract action. . . A litigant may not increase his recovery of attorney's fees by joining a cause of action in which attorney's fees are not recoverable to one in which an award is proper.”

Even so, “Attorney's fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed.” (Reynolds, supra, 25 Cal.3d at pp. 129 – 130). As discussed earlier, the court is of the opinion that THT’s cross-claims arise out of, are based upon, or relate to the contract (IMC) at issue. Consequently, THT is not precluded from recovering attorney’s fees related to its cross-complaint.

POA argues additionally that the court should adjust the lodestar amount downward because THT’s recovery ($40,000.00) is relatively minor in comparison to the attorney’s fees (20x recovery) and this action was, generally speaking, a “simple breach of contract” that was “over-litigated.” In the court’s view, the actions and responsibly are shared by both parties.

Finally, POA’s individual, line-by-line objections (See ¶6 and Exh. D to the Declaration of Chris Kaltsas in Support of Pacific Office Automation, Inc.’s Opposition, etc.) to the billing records submitted by THT do not, in this court’s opinion, support a reduction of the fee award. “In California, an attorney need not submit contemporaneous time records in order to recover attorney fees, although an attorney's failure to keep books of account and other records has been found to be a basis for disciplinary action. [Citation.]

Testimony of an attorney as to the number of hours worked on a particular case is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records. [Citation.]” (Martino v. Denevi (1986) 182 Cal.App.3d 553, 559). POA cites Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1326 for the proposition that a trial court is within its discretion to reduce a fee award when the billing records presented undermine the credibility of the requested fee award. “[B]ased on the trial court's own observations in managing the proceedings up to the hearing and on the billing record eventually submitted, the court could reasonably determine counsel's fee request was unreasonably padded, vague, and worthy of little credence.”

Here, the court has reviewed the billing records submitted by THT. When viewed in conjunction with the declaration of THT’s lead counsel, Thomas Woods, and, in particular, paragraphs 11 – 29, the court finds the billing records are amply supported.

IV. CONCLUSION Based on the foregoing, the Court GRANTS defendant/ cross-complainant THT’s motion for attorney’s fees. THT is awarded $822,311.24 in attorney’s fees. The Court will prepare the formal Order.

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Calendar Line # 3 Case Name Cathay Bank vs RPRO152N3, LLC et al