Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. CV031021
McAdams, J.
Following a bench trial, the court rejected the plaintiffs’ complaint against the City of Morgan Hill, as well as the City’s cross-complaint against Torben Rasmussen. At issue here are two of the court’s post-trial orders: (1) the denial of Rasmussen’s motion for costs under Code of Civil Procedure section 2033.420, and (2) the partial denial of the City’s motion to tax Rasmussen’s costs.
The trial court’s resolution of those claims is the subject of a companion appeal, H031707. On our own motion, we ordered consideration of the two appeals together for purposes of briefing, oral argument, and decision. We denied the parties’ joint request to consolidate the appeals.
For reasons explained below, we shall affirm the challenged orders.
BACKGROUND
I. Facts
The facts that gave rise to the underlying litigation are set forth in detail in our opinion in the companion appeal. We shall describe them here only as necessary to our resolution of this case.
II. Procedural History
We briefly summarize relevant aspects of the procedural history of this case.
A. Pleadings
1. Complaint
In November 2004, the underlying action against the City was brought by plaintiffs Judith Berkman, A. William Berkman, Marcia Schneider, Kenneth Schneider, and Ralph Heron. The plaintiffs filed a first amended complaint in May 2005. Suing for inverse condemnation, tort, and declaratory relief, plaintiffs asserted that the City was responsible for damages from the overflow of a watercourse that runs through plaintiffs’ properties. The City denied the assertions in the complaint.
2. Cross-Complaint
In June 2005, the City cross-complained against Rasmussen, who had altered the creek bed while acting as a landscaper for the Berkmans. The City asserted claims against Rasmussen for equitable indemnity, declaratory relief, and third party tort. The City brought its cross-complaint after Rasmussen’s deposition disclosed that he had deepened and widened the section of the creek on the Berkmans’ property, lined it with a fabric membrane, and added landscaping rocks. Rasmussen denied the allegations of the cross-complaint.
B. Trial; Decision
In April 2006, the court conducted a seven-day bench trial. After extensive post-trial briefing, the court rendered its decision in April 2007, finding for the City on the complaint and for Rasmussen on the cross-complaint.
C. Post-Trial Cost Motions
The parties brought a number of post-trial motions, two of which are relevant here. In May 2007, the City brought a motion to tax Rasmussen’s memorandum of costs. In June 2007, Rasmussen moved for costs of proof, based on the City’s denial of his requests for admission, pursuant to section 2033.420 of the Code of Civil Procedure.
Unspecified statutory references are to the Code of Civil Procedure.
The court denied the City’s motion in part. It denied Rasmussen’s motion outright.
D. Appeals
Rasmussen and the City both appealed. We consider each appeal in turn.
RASMUSSEN’S APPEAL
I. Background
A. Requests for Admission; Responses
In January 2006, Rasmussen propounded a first set of requests for admission on the City. As relevant here, Rasmussen asked the City to make the following admissions: that it had “no evidence” to support certain allegations in its cross-complaint against him (requests 1-7); that it had “no evidence” to support certain allegations in its summary judgment motion (requests 8-9); that the City’s experts possessed “no facts or evidence” that Rasmussen’s work was negligent or the cause of any claimed damage (requests 10-13); that Rasmussen’s work “lessened the problems” underlying the plaintiffs’ complaint (request 18); that the City’s cross-complaint was “totally and completely without merit” (request 19); and that the allegations in the cross-complaint had “no evidentiary support” (request 20).
The City responded by summarily denying each of the foregoing requests. In a simultaneous response to Rasmussen’s first set of form interrogatories, in its answer to interrogatory 17.1, the City’s explained the basis for its denials of Rasmussen’s requests for admission.
B. Post-Trial Statutory Motion
In June 2007, Rasmussen moved for expenses pursuant to section 2033.420, which permits an award of costs of proof. In support of his motion, Rasmussen submitted a memorandum of points and authorities, as well as the declaration of his counsel, which included numerous exhibits. In his points and authorities, Rasmussen argued that the City’s refusal to admit the absence of evidence was unreasonable, given that it later “failed to offer any evidence” at trial to support the necessary elements of negligence and causation. Rasmussen sought to recover attorney’s fees and costs totaling more than $68,000.
Section 2033.420 provides in full as follows:
The City opposed the motion. Like Rasmussen, the City submitted points and authorities and its counsel’s declaration, with numerous exhibits. The City disputed Rasmussen’s entitlement to compensation under section 2033.420, arguing first that it had good cause to deny the requests for admission and further that the amount requested was excessive.
In reply, Rasmussen filed a memorandum of points and authorities defending his claim.
In July 2007, the trial court conducted a hearing on the motion, which it took under submission.
On September 28, 2007, the court issued a formal order denying the motion. The order contains no findings or other explanation for the court’s ruling.
This appeal by Rasmussen ensued.
II. Legal Principles
A. Governing Law
Any party may obtain discovery by a written request that the other party admit “the truth of specified matters of fact, opinion relating to fact, or application of law to fact. A request for admissions may relate to a matter that is in controversy between the parties.” (§ 2033.010.)
“Requests for admissions differ fundamentally from other forms of discovery. Rather than seeking to uncover information, they seek to eliminate the need for proof.” (Stull v. Sparrow (2001) 92 Cal.App.4th 860, 864.) Their purpose is to expedite trial. (Id. at p. 865.) “A party responding to requests for admissions has a duty to make a reasonable investigation to ascertain the facts even though the party has no personal knowledge of the matter when the party has available sources of information as to the matters involved in such requests for admissions.” (Brooks v. American Broadcasting Co. (1986) 179 Cal.App.3d 500, 510; accord, Rosales v. Thermex-Thermatron, Inc. (1998) 67 Cal.App.4th 187, 198.)
1. Overview: Cost of proof awards under Section 2033.420
“Under Code of Civil Procedure section 2033.420, a party that denies a request for admission may be ordered to pay the costs and fees incurred by the requesting party in proving that matter.” (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1276 (Laabs).) Allowing recovery of expenses “is directly related” to the purpose underlying requests for admissions – to expedite trial. (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 509.) “Unlike other discovery sanctions, an award of expenses pursuant to section [2033.420] is not a penalty. Instead, it is designed to reimburse reasonable expenses incurred by a party in proving the truth of a requested admission... such that trial would have been expedited or shortened if the request had been admitted.” (Ibid. [discussing predecessor provision]; accord, Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865.)
“One need not be a prevailing party to be entitled to sanctions under this statute.” (Smith v. Circle P Ranch Co. (1978) 87 Cal.App.3d 267, 275.) Conversely, costs of proof “are not recoverable simply because the party promulgating the request prevails at trial.” (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 513.)
2. Applicability of Section 2033.420
As its language reflects, there are limits on the statute’s application. As provided in subdivision (a), the statute applies only where the propounding party later proves the matter at issue in the request for admission. (§ 2033.420, subd. (a); Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865.) As provided in subdivision (b), there are four explicit exceptions to the statute’s application. The first exception is for cases where an objection to the requested admission has been sustained or a response waived. (§ 2033.420, subd. (b)(1); Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 636.) The second exception is for cases where the requested admission was not of substantial importance at the time of the response. (§ 2033.420, subd. (b)(2); Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 509, fn. 5.) The third exception comes into play when the party denying the request for admissions had a reasonable belief in prevailing on the disputed matter. (§ 2033.420, subd. (b)(3); Laabs, supra, 163 Cal.App.4th at p. 1277.) The fourth and final exception applies where the responding party had some other good cause for denying the request for admission. (§ 2033.420, subd. (b)(4); Laabs, at p. 1276.)
B. Appellate Review
The trial court’s ruling on a motion under section 2033.420 is reviewed for an abuse of discretion. (Miller v. American Greetings Corp. (2008) 161 Cal.App.4th 1055, 1066.) “The determination of whether ‘there were no good reasons for the denial, ’ whether the requested admission was ‘of substantial importance, ’ and the amount of expenses to be awarded, if any, are all within the sound discretion of the trial court.” (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 508.) “By contrast, if the trial court exercises its discretion and determines that the requirements of the statute exist, reasonable expenses must be awarded.” (Ibid.) “On appeal, the trial court’s decision will not be reversed unless the appellant demonstrates that the lower court abused its discretion.” (Ibid.)
III. Analysis
With those principles in mind, we turn to the parties’ contentions.
In his opening brief, Rasmussen argues (1) the only plausible statutory basis for the ruling is an implicit finding that the City reasonably believed that it could prevail on its cross-complaint, and (2) there is insufficient evidence to support such a finding.
The City defends the ruling as a proper exercise of the court’s discretion. In the City’s view, under the doctrine of implied findings, we may infer support for the ruling on any of various statutory grounds, including (1) Rasmussen’s failure to prove the truth of the matter denied; (2) the fact that an objection was sustained or a response waived; (3) a determination that some of the requested admissions were of no substantial importance in the litigation; and (4) a determination that the City had a reasonable belief in prevailing or some other good reason to deny the requested admissions.
In reply, Rasmussen argues against application of the doctrine of implied findings in the context of section 2033.420. Rasmussen also renews his argument that the City did not have good cause to deny the requests for admission.
In assessing the parties’ contentions, we first consider the propriety of implying findings to support the denial of the motion under section 2033.420.
A. Application of the Doctrine of Implied Findings
As the parties point out, the doctrine of implied findings was applied in this specific context by the majority in the 2008 appellate decision in Laabs, supra, 163 Cal.App.4th 1242. As stated there: “It is a fundamental principle of appellate review that we presume that a judgment or order is correct.” (Id. at p. 1271.) “Applying this doctrine here, we are required to infer from the court’s denial of the... motion that it made the determinations necessary to support its order.” (Id. at p. 1272.) In the view of the Laabs majority, “section 2033.420 does not require the court to make any explicit findings on the record.” (Id. at p. 1276, fn. 20.) But that view drew what Rasmussen terms a “blistering five-page dissent.” The dissenting justice took issue with the conclusion “that explicit findings were unnecessary.” (Id. at p. 1291 [dis. opn. of Hollenhorst, J.].) In his words, “because the trial court failed to state its findings, there is nothing for us to review.” (Ibid.) He “would reverse the order and remand for further proceedings with the directions that the trial court comply with the statutory requirements and state its findings on the record.” (Ibid.)
In fact, the dissent addresses section 2033.420 briefly, in a few civil paragraphs. (Laabs, supra, 163 Cal.App.4th at p. 1291 [dis. opn. of Hollenhorst, J.].)
According to Rasmussen: “The majority ruling in Laabs appears to be the only reported appellate ruling in California that has ever applied the doctrine of implied findings to a post-trial order denying relief under... section 2033.420.” Siding with the dissenter in Laabs, Rasmussen argues: “Courts have generally applied the doctrine of implied findings to statements of decision and only rarely in other situations where the appealing party had an opportunity (and, hence, an obligation) to propose findings, to object to tentative findings, or to challenge a proposed legal basis for the trial court’s judgment or ruling below.” Because he had no opportunity to do so, Rasmussen argues, the doctrine of implied findings should not apply here.
We note, however, that a similar ruling was made more than thirty years ago, in Smith v. Circle P Ranch Co., supra, 87 Cal.App.3d 267. Discussing a predecessor provision for cost of proof sanctions, the court said there: “Although section 2034, subdivision (c), does not require the trial court to make written findings disclosing its reasons, there are instances when, in the interest of availing the aggrieved party of a meaningful appellate review, express findings supporting the order imposing sanctions are desirable.” (Id. at p. 278.)
Rasmussen is correct that the statutory “requirement of a written statement of decision generally does not apply to an order on a motion, even if the motion involves an evidentiary hearing and even if the order is appealable.” (Lien v. Lucky United Properties Inv., Inc. (2008) 163 Cal.App.4th 620, 623-624 [order striking cross-complaint under § 425.16]; see also, e.g., City of Los Altos v. Barnes (1992) 3 Cal.App.4th 1193, 1198 [order granting preliminary injunction]; cf. § 1291 [requiring a statement of decision for certain arbitration orders].)
Rasmussen is mistaken about the effect of the foregoing general principle, however. “The absence of a statement of decision does not affect the standard of review. We presume that the court’s order is supported by the record; if there is substantial evidence in the record to support the court’s implied finding of fact, the factual finding will be upheld.” (Higdon v. Superior Court (1991) 227 Cal.App.3d 1667, 1671.) Furthermore, contrary to Rasmussen’s suggestion, the record here does not reflect the trial court’s failure to properly exercise its discretion, as was the case in Dockery v. Hyatt (1985) 169 Cal.App.3d 830. There, the record established that the challenged “dismissal was based on the single factor of counsel’s failure to appear, without consideration of the other factors listed” in the governing rule. (Id. at p. 833.) Here, by contrast, the record does not compel any such inference. (See Textron Financial Corp. v. National Union Fire Ins. Co. of Pittsburgh (2004) 118 Cal.App.4th 1061, 1076 [“record as a whole does not support a conclusion the trial court failed to exercise its discretion”].) As this court has observed, “the fact that the court’s conclusion is set forth in summary fashion does not mean the court failed to engage in the requisite analysis, or that its analysis was incorrect.” (City of Los Altos v. Barnes, supra, 3 Cal.App.4th at p. 1198.)
In rejecting Rasmussen’s argument against application of the doctrine of implied findings, we begin with the general observation that the reach of that doctrine is not nearly as narrow as Rasmussen suggests. To the contrary, the doctrine has been applied in a variety of cases involving motions, in both civil and criminal matters. (See, e.g., People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143 [motion to disqualify counsel]; Moreno v. City of King (2005) 127 Cal.App.4th 17, 30 [motion to tax costs]; Rebney v. Wells Fargo Bank (1991) 232 Cal.App.3d 1344, 1349 [motion for attorney fees in class action litigation]; People ex rel. Lockyer v. Fremont General Corp. (2001) 89 Cal.App.4th 1260, 1271 [motion for award of costs under section 998]; American Western Banker v. Price Waterhouse (1993) 12 Cal.App.4th 39, 54 [motion to dismiss for failure to prosecute]; Agri-Systems, Inc. v. Foster Poultry Farms (2008) 168 Cal.App.4th 1128, 1135 [motion to confirm arbitration award]; People v. Hughes (2002) 27 Cal.4th 287, 327 [motion to suppress evidence in criminal case].)
More to the point, we believe that the Laabs majority correctly applied the doctrine of implied findings in the context of section 2033.420. (Laabs, supra, 163 Cal.App.4th at p. 1276.) Patently, the Legislature knows how to require express findings when it deems them warranted. (Id. at p. 1272.) One such example is found in the statute authorizing the imposition of sanctions on a party. (§ 128.5, subd. (c) [order imposing sanctions “shall be in writing and shall recite in detail the conduct or circumstances justifying the order”]; Lavine v. Hospital of the Good Samaritan (1985) 169 Cal.App.3d 1019, 1028-1029.) Another example is the statute governing the grant of a new trial. (§ 657 [“the court shall specify the ground or grounds upon which it is granted and the court’s reason or reasons for granting the new trial upon each ground stated”]; Steinhart v. South Coast Area Transit (1986) 183 Cal.App.3d 770, 774.) Yet another example is the statutory provision for appointment of a referee. (§ 639, subd. (d)(1) [appointments “shall be by written order” that includes “a statement of the reason the referee is being appointed”]; Hood v. Superior Court (1999) 72 Cal.App.4th 446, 449.) Further examples are found in dependency law, such as the provision requiring the juvenile court to explain its decision concerning placement with a noncustodial parent. (Welf. & Inst. Code, § 361.2, subd. (c) [“court shall make a finding either in writing or on the record of the basis for its determination”]; In re V.F. (2007) 157 Cal.App.4th 962, 972-973.) These examples represent “instances where the Legislature has mandated that a trial court express its reasons or factual determinations on the record.” (Laabs, at p. 1272.) “However, these situations are rare.” (Ibid.)
The statute at issue here requires the court to award costs of proof in a proper case “unless it finds” that one of the four statutory exceptions applies. (§ 2033.420, subd. (b).) The quoted language cannot be read as mandating express written or oral findings on the record. As the Laabs majority aptly put it, the statutory requirement “that the court make the required... determinations does not mean that the court is further required to explicitly state such determinations in the record.” (Laabs, supra, 163 Cal.App.4th at p. 1272; id. at p. 1276, fn. 20.) “Although the court did not expressly state its findings regarding the issues involved in the motion, neither the statute nor other authority required it to do so. Thus, based upon the doctrine of implied findings and the fundamental rules of appellate review upon which it is based, we are required to infer any factual determinations necessary to support the order.” (Id. at p. 1273.)
B. Support for the Ruling
Implying findings in support of the trial court’s ruling, we conclude that the record in this case provides ample evidence to support the trial court’s decision to deny Rasmussen’s motion under section 2033.420, based on one or more of the statute’s provisions. We consider those provisions in turn.
1. Subdivision (a); failure to prove
“That an issue be proved is an express statutory prerequisite to recovery” of costs of proof. (Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865.) In the words of the statute: “If a party fails to admit the genuineness of any document or the truth of any matter when requested to do so..., and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, ” the requesting party may apply for an order requiring the responding party “to pay the reasonable expenses incurred in making that proof, including reasonable attorney’s fees.” (§ 2033.420, subd. (a), italics added.) “ ‘Proof’ is the establishment by evidence of a requisite degree of belief concerning a fact in the mind of the trier of fact or the court.” (Evid. Code, § 190; Barnett v. Penske Truck Leasing (2001) 90 Cal.App.4th 494, 498.) “Expenses are recoverable only where the party requesting the admission ‘proves... the truth of that matter, ’ not where that party merely prepares to do so.” (Wagy v. Brown (1994) 24 Cal.App.4th 1, 6.)
According to the City, Rasmussen never proved what he asked the City to admit – that it lacked any evidence to support its allegations against him. (See Smith v. Circle P Ranch Co., supra, 87 Cal.App.3d at p. 274 [“plaintiff’s burden of proof that defendants were negligent in the present case was not coextensive with the showing required by plaintiff in seeking imposition of sanctions for denial of specific facts by defendants on pretrial requests for admissions”].)
Rasmussen does not meet that argument directly, but he does maintain that “the trial court expressly found that the City failed to introduce evidence sufficient to prove either of the two essential elements of each of the causes of action alleged in its cross-action – negligence and causation – that Mr. Rasmussen had sought to eliminate from the case by propounding his requests for admission upon the City.”
In the relevant portion of its statement of decision, the trial court found that the City had not carried its burden of proving Rasmussen’s negligence. The court described the evidence introduced on the question, which included testimony by the plaintiffs’ expert (Joseph Countryman) and by the City’s expert (James Schaaf), who both opined that Rasmussen used undersized landscaping rocks. But the court also noted the absence of any testimony “that a gardener/landscaper such as Mr. Rasmussen would have or should have known that the rocks used in the Ditch were too small to withstand an unusually heavy rain storm” like the one in December 2002 that washed the rocks away. Furthermore, the court found, the rocks were only “a small part” of Rasmussen’s work on the creek, “and the Berkmans did not assert a claim relative to those river rocks, ” and Rasmussen’s overall “work in the watercourse increased its capacity and reduced future erosion.”
As the City persuasively argues, however: “There is a vast difference between having no proof and having insufficient proof to sway the trier of fact.” Here, the trial court’s references to the evidence demonstrate that the City did have facts to support its claims. That being so, Rasmussen did not prove that the City had “no evidence” to support the allegations of the cross-complaint (requests for admission 1-7 and 20) or that Schaaf possessed “no facts or evidence” that Rasmussen’s work either was negligent or was the cause of any claimed damage (requests for admission 10-13). Rasmussen thus did not establish “the affirmative of the issues as to which admissions were requested.” (Haseltine v. Haseltine (1962) 203 Cal.App.2d 48, 61.)
Under these circumstances, the court could have denied Rasmussen’s motion based solely on section 2033.420, subdivision (a), for failure to prove the truth of the matter in requests for admission 1-7, 10-13, and 20, which all sought admissions that the City lacked evidence for certain of its claims. Logically, the same conclusion applies to request for admission 19, which asked the City to admit that its cross-complaint was “totally and completely without merit.” That leaves only requests for admission 8 and 9, which refer to evidence supporting the City’s unsuccessful summary adjudication motion.
Moreover, even if we were to presume a trial court finding that Rasmussen later proved the denied matter, the statute permits a denial of costs of proof based any of the four statutory exceptions enumerated in section 2033.420, subdivision (b). In Rasmussen’s view, only one of those exceptions has any likely application here – subdivision (b)(3) – and the other three “can be eliminated as either impossible or highly improbable.” The City disagrees. We therefore consider each statutory exception in turn.
2. Subdivision (b)(1); objection
The trial court need not award costs of proof if the responding party’s “objection to the request was sustained or a response to it was waived” by the propounding party. (§ 2033.420, subd. (b)(1).) Under this provision, to avoid waiving entitlement to costs of proof, the propounding party generally must move to compel a further response after an objection is interposed. (Wimberly v. Derby Cycle Corp., supra, 56 Cal.App.4th at p. 636.) But no such motion is required when the objection is coupled with an unequivocal denial. (American Federation of State, County and Municipal Employees v. Metropolitan Water Dist. of Southern California (2005) 126 Cal.App.4th 247, 268-269.)
Rasmussen maintains that this exception has no application here, because the City did not object to any of the pertinent requests for admission.
The City disagrees, noting that it explained and qualified its denials in response to interrogatories served simultaneously with Rasmussen’s requests for admission. In the City’s view, since “Rasmussen never filed a motion to compel further answers to either the response to request for admissions or to the responses to form interrogatories, ... any objections to them have been waived.” Furthermore, the City notes, in its response to interrogatory 17.1, it specifically objected to Rasmussen’s request for admission 19, which sought an admission that the cross-complaint was “totally and completely without merit, ” on the ground that it requested a legal opinion, not facts.
As Rasmussen reads section 2033.420, however, we should consider only the City’s responses summarily denying the requests for admission and ignore the City’s simultaneous response to interrogatory 17.1, which explained those denials.
We need not resolve the statutory interpretation issue raised by Rasmussen. In this case, with the exception of request for admission 19, the City made no objections, even in its response to interrogatory 17.1.
Thus, it does not appear that the trial court had a basis for resting its decision on this statutory exception.
3. Subdivision (b)(2); no substantial importance
The second statutory exception to an award of costs of proof is where the requested matter “was of no substantial importance.” (§ 2033.420, subd. (b)(2).) The test is whether the matter at issue in the request for admission is “central to disposition of the case.” (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 509; Laabs, supra, 163 Cal.App.4th at p. 1276.) “In order to be of substantial importance, a request for admission should have some direct relationship to an issue which, if not proven, would have altered the results of the case.” (Rosales v. Thermex-Thermatron, Inc., supra, 67 Cal.App.4th at p. 198.) “There is no requirement, however, that the fact in question is one that would have altered the determination of the ultimate issue.” (Ibid.)
According to Rasmussen, all of his requests for admission were of substantial importance, since they “went to the City’s lack of admissible evidence to prove negligence and causation – two elements of its cross-complaint.”
The City takes a different view, identifying a number of the requested admissions as lacking in substantial importance. The first is request for admission 2, which asked the City to admit its lack of evidence that Rasmussen performed work requiring a contractor’s license. As the City points out, Rasmussen’s own appellate brief characterizes his lack of a license as “at best only marginally probative of whether he was negligent or whether his improvements caused any damage.” (See Laabs, supra, 163 Cal.App.4th at p. 1276 [“trial court could reasonably have concluded” that certain facts for which admissions were sought “were not central to the disposition of the case”].) Additionally, the City notes, requests number 8, 9, and 13 all relate to evidence in support of the City’s unsuccessful summary adjudication motion. As the City correctly observes, evidence supporting such a motion is not of substantial importance at trial. (Cf. Barnett v. Penske Truck Leasing, supra, 90 Cal.App.4th at 499 [“the matter at issue was proved in the summary judgment motion”].) The evidentiary predicate for an unsuccessful summary adjudication motion is not even “partially outcome determinative, ” nor does it bear any “direct relationship to one of the central issues in the case, i.e., an issue which, if not proven, would have altered the results in the case.” (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 509.) The critical inquiry is “whether at the time the request was denied it was reasonably possible for the party making the denial to have appreciated that the requested admission involved a central issue... in the case.” (Id. at p. 510.) Finally, the City refers to requests number 10, 11, and 12, which seek an admission that the City’s expert, Schaaf, had no facts or evidence concerning Rasmussen’s work independent of information given him by the City’s engineer and trial counsel. In the City’s view, the source of Schaaf’s knowledge lacks substantial importance for purposes of this statutory exception.
We agree with the City that at least some of its denials relate to requests for admission that are not central to disposition of the case. For that reason, we conclude that the trial court could have rested its decision in part on the statutory exception provided by section 2033.420, subdivision (b)(2).
4. Subdivision (b)(3); reasonable belief in prevailing
The trial court need not award costs of proof if the party denying “the admission had reasonable ground to believe that that party would prevail on the matter.” (§ 2033.420, subd. (b)(3); see Miller v. American Greetings Corp., supra, 161 Cal.App.4th at p. 1066 [where the pertinent law was “unsettled, appellants could have reasonably entertained a good faith (albeit ultimately mistaken) belief that they could prevail”].)
The City maintains that it had a reasonable belief in prevailing on its cross-complaint at the time of its response to the requests for admission. The City points to its discovery responses, in which it cited the following evidence suggesting that Rasmussen was negligent or the cause of the plaintiffs’ damages: (1) Rasmussen’s lack of qualifications or experience; (2) Rasmussen’s choice of rocks that were too small; and (3) the lack of any complaints prior to Rasmussen’s work, giving rise to an inference that his work caused the plaintiffs’ problems.
As stated in the City’s answer to interrogatory 17.1, Rasmussen was “not licensed either as a landscape designer or as a contractor” and he “had never worked in an actual stream or creek.” Further, he “did not do any research to determine the effect of running water on the river rock that he placed in the ditch, nor had he consulted with anyone about what the effect would be.” Thus, Rasmussen’s “assumption that the river rock would stay in place was not based on any studies, or research, or prior experience.”
According to the City’s answer to interrogatory 17.1, because Rasmussen “used small river rock instead of rock having a weight of 70 pounds each, ” the rocks were washed away in the storm of December 2002, “with a lot of them going downstream into Mr. Schneider’s property.” Also, the downstream movement of the small rocks created “small dams” and exposed the felt liner in the creek.
In its answer to interrogatory 17.1, the City mentioned the Berkmans’ complaint “that the ditch was continuing to erode” after the December 2002 storm and it stated that since Rasmussen’s “work was supposedly designed to stop erosion of the creek banks, ” the City had concluded that his work “was negligently performed.” In its appellate brief, the City also points to evidence in its possession at the time of its discovery responses that the Berkmans had not “complained to the City within twelve years prior to Rasmussen performing his work in the creek in the Berkman property.” According to the City: “It can therefore be inferred that for the twelve years prior to 2002, when the creek was left in its natural condition, the Berkmans had no problems to complain about.” The City raised the same point in argument below.
Rasmussen dismisses all of these grounds. (1) Concerning his lack of a license, Rasmussen maintains that it “is at best only marginally probative of whether he was negligent or whether his improvements caused any damage. The City could not reasonably have believed that Mr. Schaaf’s direct admission that Mr. Rasmussen’s improvements caused no damage could be refuted by the inference of negligence” from his lack of licensure. (2) Concerning his choice of undersized rock, Rasmussen asserts that “Mr. Schaaf never expressed the opinion” that that decision “was negligent.” Furthermore, the City never called its designated expert to testify on the standard of care for landscapers altering seasonal creeks. (3) Addressing the lack of prior complaints, Rasmussen states: “At most, this evidence creates a mild inference that erosion and flooding did not start occurring until after Mr. Rasmussen installed his improvements.” In Rasmussen’s view, however, the “marginal probative value” of this inference was outweighed by evidence of prior erosion and flooding. Furthermore, the assertion that there were no prior complaints was itself “controverted because Mr. Berkman testified” about complaints to the City in the 1980s.
The determination of whether the losing party reasonably believed that it could prevail is entrusted to the trial court’s discretion. (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 508.) It is for the trial court to decide what weight to give conflicting evidence and what inferences to draw. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 334.) On this record, the trial court could have determined that the City had a reasonable belief in prevailing, based on any of the three proffered grounds. (1) The trial court could have credited the evidence cited by the City regarding Rasmussen’s lack of experience with live streams, his failure to research or consult before altering the creek, and his lack of a license or a permit for the work. (See Ajaxo Inc. v. E*Trade Group, Inc. (2005) 135 Cal.App.4th 21, 50 [it is for the trier of fact to weigh inferences against direct evidence].) (2) The trial court was presented with undisputed evidence that Rasmussen chose rock that was too small, which washed downstream. As for its failure to call its designated expert, the City asserts that his “testimony could have added nothing more” to the evidence that the rocks were too small. Though the trial court ultimately found a failure of proof on this question, it nevertheless could have credited the City’s belief in prevailing on this point. (Cf. Wimberly v. Derby Cycle Corp., supra, 56 Cal.App.4th at p. 637 [reliance on designated expert did not justify the defendant’s denial of request for admission, where it was “clear from the record” that the defendant “never” intended to call the expert at trial].) (3) The trial court could credit the City’s belief in the lack of prior complaints as a basis for believing that it would prevail against Rasmussen. Again, that inference was for the trial court to draw. (Sav-On Drug Stores, Inc. v. Superior Court, at p. 334.)
On this record, the court could have rested its decision on the statutory exception provided by section 2033.420, subdivision (b)(3).
4. Subdivision (b)(4); other good cause for denials
As the fourth and final exception, the court may deny costs of proof when the responding party had “other good reason for the failure to admit.” (§ 2033.420, subd. (b)(4); Laabs, supra, 163 Cal.App.4th at p. 1277.)
Here, as explained above, the City had evidence suggesting Rasmussen’s negligence. Even though that evidence did not persuade the trier of fact, it nevertheless supports an implied finding that the City had good cause to deny the requests for admission. “The fact that matters denied were subsequently proved by uncontradicted evidence, if true, does not make the denial unreasonable per se, in retrospect.” (Haseltine v. Haseltine, supra, 203 Cal.App.2d at p. 61.)
Under these circumstances, the trial court could have denied the motion based on section 2033.420, subdivision (b)(4).
C. Conclusion
Applying the doctrine of implied findings, and deferentially reviewing the challenged ruling in light of the record, we find no abuse of discretion. The trial court could have based its denial on any of a number of statutory bases. We therefore reject Rasmussen’s challenge to the order denying his costs under section 2033.420.
CITY’S APPEAL
I. Background
Having secured judgment in his favor on the cross-complaint, Rasmussen filed a memorandum of costs as the prevailing party under section 1032. He sought just over $26,000 in litigation costs for various items, including deposition costs, witness fees, and trial transcripts.
In May 2007, the City moved to tax Rasmussen’s costs. The City supported its motion with a memorandum of points and authorities, along with two declarations, one from its trial counsel and one from a court reporter reflecting that Rasmussen had not purchased deposition transcripts from her. In its memorandum of points and authorities, the City argued that the court should deny Rasmussen’s costs in their entirety, on two grounds: (1) he was not the prevailing party on the cross-complaint, and (2) his section 998 settlement offer of $1,000 was not made in good faith. Alternatively, the City argued that the court should reduce or eliminate certain costs claimed by Rasmussen, on two grounds: (1) those costs were not paid by him but rather by the Berkmans, and (2) the proposed allocation of half of those costs to Rasmussen and half to the plaintiffs was unreasonable.
Rasmussen opposed the City’s motion to tax. He submitted the declaration of his attorney, together with argument disputing all of the City’s grounds for denying or reducing his recovery. Rasmussen thus asserted (1) he was the prevailing party, (2) his section 998 offer was made in good faith, (3) the court was required to award costs incurred by him, whether or not he paid them, and (4) the costs were properly allocated between him and the plaintiffs. Addressing the third point, the attorney’s declaration states that Rasmussen tendered defense of the cross-complaint to the Berkmans, who accepted the tender and “agreed to advance” Rasmussen’s costs “with the understanding that Mr. Rasmussen would reimburse them if he prevailed on the cross-action and obtained a cost award against the City.” The Berkmans did so because “Rasmussen had no insurance and extremely limited financial resources with which to pay his litigation costs.” The declaration further states: “There was never any understanding that I was aware of that Mr. Rasmussen’s share of the costs incurred in this litigation would simply be forgiven.” Addressing the fourth point, the declaration describes the decision “to allocate most of the litigation costs equally – i.e., 50 percent each – between the plaintiffs, on the one hand, and Mr. Rasmussen on the other.” As justification for the equal split, the declaration states: “Because the City was seeking (inter alia) indemnity, all of the issues in the case potentially implicated Mr. Rasmussen.”
In reply, the City filed a memorandum of points and authorities defending its claim, supported by its attorney’s declaration.
In July 2007, the trial court conducted a hearing on the motion, which it took under submission.
On October 4, 2007, the court issued a formal order partially granting and partially denying the motion. In the order, the court first denied the City’s request to strike Rasmussen’s cost bill in its entirety, saying: “Mr. Rasmussen is the prevailing party.... The court finds his § 998 offer reasonable and made in good faith in view of the existing evidence at the time the offer was made.” Next, the court addressed three specific disputed items: (1) deposition costs, (2) expert witness fees, and (3) court-ordered transcripts. Overall, the court determined that Rasmussen had “incurred costs as he was obligated to repay the Berkmans for advancing his costs. The court finds the fifty percent allocation of the requested deposition costs to all plaintiffs and fifty percent to Mr. Rasmussen reasonable, as all plaintiffs were aligned parties.” More specifically regarding the first category, the court stated: “Because all major issues in the complaint potentially implicated Mr. Rasmussen on the cross-complaint, it is reasonable for Mr. Rasmussen to obtain deposition transcripts relating to the complaint.” As to the second category, the court granted the City’s motion to strike witness fees for two experts disclosed only by the plaintiffs, not by Rasmussen. With respect to the remaining expert, Joseph Countryman, the court approved “a fifty-fifty allocation” between Rasmussen and the plaintiffs. Concerning the third disputed item, court-ordered transcripts, the court took the same tack, allowing Rasmussen to recover 50 percent of those costs.
The City filed a notice of appeal from this order after Rasmussen did so.
Rasmussen has not pursued his appeal from this order.
II. Legal Principles
A. Governing Law
The recovery of costs is purely statutory. (Davis v. KGO-T.V., Inc. (1998) 17 Cal.4th 436, 439.) Under section 1032, subdivision (b), the prevailing party in litigation is entitled to recover enumerated costs as a matter of right. (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1333.) The only pertinent limitations on statutorily allowable costs are that they must be “incurred, ” they must be “reasonably necessary to the conduct of the litigation” and they must be “reasonable in amount.” (§ 1033.5 subd. (c)(1) & (3).)
Section 1033.5 sets forth which items are allowable and which are not. “Under section 1033.5, subdivision (b)(1), ... parties may not recover expert witness fees as costs ‘except when expressly authorized by law.’ Such express authorization exists” under section 998. (First Nationwide Bank v. Mountain Cascade, Inc. (2000) 77 Cal.App.4th 871, 875-876.) Section 998 comes into play when a party refuses a good faith settlement offer and then fails to secure a more favorable judgment at trial. (Ibid.)
1. Prevailing party
Provisions for determining the prevailing party are set forth in section 1032, subdivision (a)(4). The first prong of that provision describes four circumstances in which a litigant will be statutorily defined as a prevailing party. “Generally, when a party falls squarely within one of the four situations enumerated in the definition of a prevailing party under section 1032, that party is entitled to recover costs as a matter of right.” (Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 188.) Under the second prong of section 1032, subdivision (a), it is left to the trial court’s discretion to make the prevailing party determination and to award costs. (Ibid.)
That portion of the statute provides: “ ‘Prevailing party’ includes the party with a net monetary recovery, 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.” (§ 1032, subd. (a)(4).)
That portion of the statute provides: “When any party recovers other than monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.” (§ 1032, subd. (a)(4).)
“A cross-defendant in whose favor a dismissal of the cross-complaint is entered is the prevailing party” under the statutory definition contained in the first prong of section 1032, subdivision (a). (Great Western Bank v. Converse Consultants, Inc. (1997) 58 Cal.App.4th 609, 612, distinguished on another point in Goodman v. Lozano, supra, 47 Cal.4th at p. 1330; Chinn v. KMR Property Management, supra, 166 Cal.App.4th at p. 189; City of Long Beach v. Stevedoring Services of America (2007) 157 Cal.App.4th 672, 680 (City of Long Beach).)
2. Section 998 settlement offers
Section 998 authorizes a prevailing party to recover its costs from a losing party who rejected a reasonable, good faith offer to compromise. (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 134.) In pertinent part, the statute permits a discretionary award “to cover costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary” during trial or trial preparation. (§ 998, subd. (c)(1).) “In exercising that discretion the trial court must evaluate whether defendant’s offer was made in good faith and reasonable under the circumstances, and whether fees sought by offeror are reasonable and justified in amount.” (Culbertson v. R. D. Werner Co., Inc. (1987) 190 Cal.App.3d 704, 711.)
3. Allocation
When a party challenges the trial court’s “allocation” of costs, the nature of the inquiry on appeal depends on whether the cost award was mandatory or discretionary.
Where the cost award is mandatory under the first prong of section 1032, subdivision (a), the pertinent question is whether allowable costs incurred by the prevailing party were “reasonably necessary to the conduct of the litigation and reasonable in amount.” (Nelson v. Anderson, supra, 72 Cal.App.4th at p. 130, citing § 1033.5 subd. (c)(2).) For example, in actions involving multiple parties, the trial court may be “justified in disallowing costs which were incurred” by prevailing defendants that arise from aspects of the case unrelated to their trial victory. (Nelson v. Anderson, at p. 130.) The rationale is that such costs are unnecessary. (Ibid.) In such cases, the trial court must analyze “the reasonableness or necessity of the costs affected” by any such disallowance or reduction. (Ibid.) By limiting costs to those necessary to success at trial, the court can avoid giving a prevailing defendant “a double or greater recovery when there are two or more plaintiffs.” (Ibid.)
Where the cost award is discretionary under the second prong of section 1032, subdivision (a), because there is no statutorily defined prevailing party, different issues are presented. In such cases, the court has discretion to allocate costs among parties. (Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 985, disapproved on other grounds in Goodman v. Lozano, supra, 47 Cal.4th at p. 1330; Smock v. State (2006) 138 Cal.App.4th 883, 889.) As pertinent here, that discretion has been exercised in situations where costs were jointly incurred by several litigants, not all of whom were prevailing parties. (See, e.g., Slavin v. Fink (1994) 25 Cal.App.4th 722, 725-726.) The question in such cases is whether the trial court properly exercised its discretion. (Id. at p. 726; see Kramer v. Ferguson (1964) 230 Cal.App.2d 237, 251 [decided under prior statute].)
B. Appellate Review
“Generally, a trial court’s determination that a litigant is a prevailing party, along with its award of fees and costs, is reviewed for abuse of discretion.” (Goodman v. Lozano, supra, 47 Cal.4th at p. 1332.) Likewise, “the trial court’s award of expert witness fees as a section 998 discretionary item of costs” is reviewed “using an abuse of discretion standard.” (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1262.) “On appeal, the losing party has the burden of establishing the trial court abused its discretion.” (Thompson v. Miller (2003) 112 Cal.App.4th 327, 339.) The appellant must show that “the trial court clearly abused its discretion, resulting in a miscarriage of justice.” (Id. at p. 339.)
On the other hand, review is de novo when the relevant facts are undisputed and the issue on appeal requires statutory interpretation. (Goodman v. Lozano, supra, 47 Cal.4th at p. 1332; City of Long Beach, supra, 157 Cal.App.4th at p. 678.)
III. Analysis
Here, the City argues (1) the trial court abused its discretion in awarding Rasmussen his costs as the prevailing party; (2) Rasmussen’s section 998 settlement offer was not made in good faith; and (3) the trial court abused its discretion in allocating the costs between Rasmussen and the plaintiffs.
A. Costs to Rasmussen as Prevailing Party
The City purports to acknowledge Rasmussen’s status as prevailing party. But it nevertheless argues that his costs “should not have been allowed in the circumstances particular to this case.” And the City also asserts – somewhat confusingly, in light of its earlier acknowledgement – that “since Rasmussen did not receive a monetary relief, the trial court retains the right to determine the prevailing party.”
The factual premise for the City’s argument is that its cross-complaint was rendered moot by the Berkmans’ mid-trial waiver of their damage claims relating to movement of the river rocks. As legal support for its argument, the City cites Lewin v. Board of Trustees (1976) 62 Cal.App.3d 977. In that case, the court affirmed an award for the petitioners, some of whom “would have been entitled to relief, would have had judgment, but for the actions of respondent in re-employing them and rendering their petition moot.” (Id. at p. 983.) In the court’s words, “where the litigant who prevails on the law is denied affirmative relief only because belated conduct of the opposing litigant renders moot the need for judicial relief, the prevailing litigant is entitled to its costs.” (Id. at p. 984.)
Another case reaching the same result in Miller v. American Honda Motor Co. (1986) 184 Cal.App.3d 1014. There, the court affirmed the trial court’s denial of costs to the prevailing cross-defendant, made on that the ground that the plaintiff’s failure to prove his complaint mooted the issues in the cross-complaint for indemnity, with the result that neither party to the cross-complaint “could be considered to have prevailed.” (Id. at p. 1021.)
Rasmussen disagrees with the City, disputing both the factual and legal components of its argument. First, Rasmussen maintains, contrary to the City’s new factual theory on appeal, there was no mid-trial waiver; in fact, the Berkmans never made the asserted claim in the first place. “Second, and more fundamentally, ” Rasmussen argues, the City concedes that he is the prevailing party. For that reason, Rasmussen maintains, he is entitled to costs as a matter of right, absent contrary statutory authority, which the City has not cited.
As we now explain, Rasmussen is correct on the law.
As noted above, “when a party falls squarely within one of the four situations enumerated in the definition of a prevailing party under section 1032, that party is entitled to recover costs as a matter of right.” (Chinn v. KMR Property Management, supra, 166 Cal.App.4th at p. 188.) A successful cross-defendant falls in that category. (Id. at p. 189; see also, e.g., Great Western Bank v. Converse Consultants, Inc., supra, 58 Cal.App.4th at p. 612.) Absent statutory authority, “the court has no discretion to deny costs to the prevailing party.” (Nelson v. Anderson, supra, 72 Cal.App.4th at p. 129; accord, Vons Companies, Inc. v. Lyle Parks, Jr., Inc. (2009) 177 Cal.App.4th 823, 832.)
“There is no exception in the cost statute for dismissals of cross-complaints obtained on the ground that the cross-complaint has become moot. When a cross-complaint is dismissed as moot, the cross-defendant is one in whose favor the cross-complaint was dismissed and is therefore a prevailing party under... section 1032 entitled to costs as a matter of right.” (City of Long Beach, supra, 157 Cal.App.4th at p. 680.)
In this case, as a cross-defendant in whose favor dismissal was ordered, Rasmussen is a statutorily defined prevailing party. (§ 1032, subd. (a).) As such, he is entitled to allowable costs as a matter of right. (§ 1032, subd. (b).) The trial court thus was required to award Rasmussen costs for depositions and court-ordered trial transcripts, so long as they were incurred, necessary, and reasonable in amount. (§ 1033.5, subds. (a)(3), (a)(9), (c).) There is no exception for mootness. (City of Long Beach, supra, 157 Cal.App.4th at p. 680.) In addition, the court had discretion to award Rasmussen expert witness fees under section 998, if “actually incurred and reasonably necessary” in litigating the action in which he prevailed. (§ 998, subd. (c)(1).)
B. Settlement Offer
The City argues that Rasmussen is not entitled to the benefit of the cost-shifting provisions of section 998, because his $1,000 settlement offer was unreasonable in light of the City’s “excessive exposure” from the plaintiffs’ damages claims for diminution in property value. Moreover, in the City’s view, Rasmussen’s offer “was especially unreasonable because the plaintiffs who would be making these damage claims were closely aligned with Rasmussen when he made this offer to compromise.”
“Whether the settlement offer was reasonable and made in good faith is left to the sound discretion of the trial court.” (Thompson v. Miller, supra, 112 Cal.App.4th at p. 338.) Here, the trial court expressly determined that Rasmussen’s offer was “reasonable and made in good faith in view of the existing evidence at the time the offer was made.” We find no merit in the City’s assignment of that determination as an abuse of discretion.
“The purpose of section 998 is to encourage the settlement of lawsuits prior to trial.” (People ex rel. Lockyer v. Fremont General Corp., supra, 89 Cal.App.4th at p. 1269.) “When a defendant perceives himself to be fault free and has concluded that he has a very significant likelihood of prevailing at trial, it is consistent with the legislative purpose of section 998 for the defendant to make a modest settlement offer. If the offer is refused, it is also consistent with the legislative intent for the defendant to engage the services of experts to assist him in establishing that he is not liable to the plaintiff. It is also consistent with the legislative purpose under such circumstances to require the plaintiff to reimburse the defendant for the costs thus incurred.” (Culbertson v. R. D. Werner Co., Inc., supra, 190 Cal.App.3d at pp. 710-711.) In effect, “Section 998 achieves its aim by punishing a party who fails to accept a reasonable offer from the other party.” (Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 699.)
“Whether a section 998 offer is reasonable must be determined by looking at circumstances when the offer was made.” (Elrod v. Oregon Cummins Diesel, Inc., supra, 195 Cal.App.3d at p. 699.) The offer must be assessed in light of the knowledge possessed both by the offeror and by the offeree. (Ibid.) “If an experienced attorney or judge, standing in defendant’s shoes, would place the prediction within a range of reasonably possible results, the prediction is reasonable.” (Ibid.; accord, Colbaugh v. Hartline (1994) 29 Cal.App.4th 1516, 1528.) After the court assesses “how well it approximates the amount the party will have to pay if found liable, ” the amount may be “discounted by an appropriate factor for receipt of money before trial.” (Thompson v. Miller, supra, 112 Cal.App.4th at p. 339, citing Nelson v. Anderson, supra, 72 Cal.App.4th at p. 135.) The court also may “add a discount for the probability of success of the claim for purposes of determining the reasonableness of the offer.” (Thompson v. Miller, at p. 339, fn. 4.)
“Even a modest or ‘token’ offer may be reasonable if an action is completely lacking in merit.” (Nelson v. Anderson, supra, 72 Cal.App.4th at p. 134; accord, Thompson v. Miller, supra, 112 Cal.App.4th at p. 339.) Furthermore, “when a party obtains a judgment more favorable than its pretrial offer, it is presumed to have been reasonable and the opposing party bears the burden of showing otherwise.” (Thompson v. Miller, at pp. 338-339; see also, e.g., Nelson v. Anderson, supra, 72 Cal.App.4th at p. 134; Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102, 117.)
As the court explained in Santantonio, “the mere fact” that the plaintiffs claimed large losses “does not mean that defendants’... offer was unreasonable or unrealistic.” (Santantonio v. Westinghouse Broadcasting Co., supra, 25 Cal.App.4th at p. 118.) The same is true here, and for the same reasons. In Santantonio, the offeree “contended that the damage estimates by plaintiffs’ expert were greatly excessive....” (Ibid.) That is the situation here as well: the plaintiffs’ real estate appraisal expert set their collective diminution damages at more than half a million dollars, while the City’s expert set the damages at zero. In Santantonio, the offeror denied all liability to the offeree and the trier of fact “ultimately agreed.” (Ibid.) Furthermore, the offeree’s “failure to obtain a judgment more favorable than the offer did not result from fortuitous offsets” but instead “was the result of a complete defense [judgment]... on the issue of liability.” (Id. at p. 117.) Both of these factors are present here. In Santantonio, “the trial judge who heard all of the evidence and presumably was in the best position to evaluate” the offer “concluded that it was reasonable.” (Ibid.) The same is true in this case.
Given Rasmussen’s success at trial, his section 998 offer is presumed to be reasonable, and the City had “the burden of showing otherwise.” (Thompson v. Miller, supra, 112 Cal.App.4th at pp. 338-339.) The City did not do so below, nor has it shown error in this court. There is no basis for disturbing the trial court’s determination that Rasmussen’s offer was reasonable at the time it was made, in light of all the circumstances of this case.
C. Allocation
In its final appellate contention, the City argues that Rasmussen should not be allowed to split costs with the plaintiffs. The City offers two reasons. First, the City contends, Rasmussen failed to carry his “burden of proof by showing that he had actually incurred the costs he was claiming, ” but instead “took the position that he was entitled to claim costs paid for by the Berkmans.” In the City’s view: “Even though Rasmussen was the prevailing party in the cross-complaint, he still should not be entitled to recover from the City those costs he did not incur. The fact that Rasmussen may have entered into an alleged secret ‘contingency cost-sharing agreement’ with the plaintiffs is not the same as him actually incurring the obligation for those costs.” Second, the City maintains, “the allocation of costs at 50% between the plaintiffs and Rasmussen is totally arbitrary and without statutory or case authority.”
Rasmussen disputes both points. We agree with his position.
1. Whether the costs were incurred by Rasmussen
Contrary to the City’s contention, Rasmussen’s cost-sharing agreement with the Berkmans in no way undermines the trial court’s determination that Rasmussen incurred the costs at issue. To the contrary, as the court explicitly found, “Mr. Rasmussen incurred costs as he was obligated to repay the Berkmans for advancing his costs.”
Section 1033.5 includes this provision: “Costs are allowable if incurred, whether or not paid.” (§ 1033.5, subd. (c)(1).) “The code sections contain no requirement that a party claiming costs must have personally incurred the obligations enumerated in the memorandum.” (Ceranski v. Muensch (1943) 60 Cal.App.2d 751, 754 [discussing former §§ 1032, 1033.) Under section 998, expert witness fees may be awarded if “actually incurred” by the party seeking them. (§ 998, subd. (c)(1).) “The statute contains no requirement that any particular person must have incurred the expert witness fees, just that the fees must have been actually incurred.” (Skistimas v. Old World Owners Assn. (2005) 127 Cal.App.4th 948, 952.) “Whether the individual defendants paid the fees out of their own pockets or their insurer paid the fees on their behalf should not be determinative of their right to recover those fees.” (Ibid.)
The City’s argument for taxing costs because they were not incurred by the claimant is similar to a contention presented in Jones v. Dumrichob, supra, 63 Cal.App.4th 1258. At issue there was the “appellants’ contention that the expert fees respondent claimed and recovered were incurred at the behest of the dismissed codefendant, Sutter.” (Id. at p. 1264.) The appellants made that claim “despite a declaration by respondent’s attorney that respondent and Sutter agreed to split the expert witness fees for Dr. Lunde.” (Id. at pp. 1264-1265.) The court rejected the appellants’ argument, first noting the absence of any legal authority prohibiting “reliance on the declaration of counsel as documentation of the items claimed.” (Id. at p. 1265.) Concerning the evidence, the court said this: “Appellants offered no evidence challenging the validity or sufficiency of the declaration, but rather make the unsubstantiated statement that respondent did not incur Dr. Lunde’s fees. In the absence of any evidence contradicting the authenticity of the documentation submitted, we conclude respondent’s proof met the statutory requirements and was adequate to establish the cost-sharing agreement between the codefendants.” (Ibid.; see also Kramer v. Ferguson, supra, 230 Cal.App.2d at p. 250 [citing uncontroverted declarations that two prevailing defendants “had necessarily incurred” the challenged costs].)
The same is true here. The declaration of Rasmussen’s attorney states that the Berkmans “agreed to advance” Rasmussen’s costs “with the understanding that Mr. Rasmussen would reimburse them if he prevailed on the cross-action and obtained a cost award against the City.” The City did not controvert that evidence. And there is no legal requirement that the costs be personally incurred. (Skistimas v. Old World Owners Assn., supra, 127 Cal.App.4th at p. 952; Ceranski v. Muensch, supra, 60 Cal.App.2d at p. 754.) On this record, Rasmussen “met the statutory requirements” of showing that he incurred the costs. (Jones v. Dumrichob, supra, 63 Cal.App.4th at p. 1265.)
2. Whether the division of costs was proper
The City also challenges the equal division of costs between Rasmussen and the Berkmans, mounting a two-pronged attack. In the first prong, the City challenges the percentage allocation, saying: “Why did the trial court not divide the costs by 1/4ths, allocating 1/4th each to the Berkmans, Schneiders, Heron and Rasmussen? Why did the trial court not reduce the costs reimbursable to Rasmussen to 5%, similar to what the trial court in Slavin did? The trial court just adopted Rasmussen’s percentage of 50% simply because that is the amount Rasmussen said he was obligated to pay to the Berkmans. However, Rasmussen had no financial interest in negotiating a lower percentage because he was not obligated to pay costs in any event.” In the second prong of its challenge, the City argues that “the arrangement is unfair... because the City ends up paying costs to a cross-defendant solely so that cross-defendant can reimburse the losing plaintiff costs that they should not be entitled to recover.” The City maintains that it was an abuse of discretion for the trial court to sanction this “subterfuge” and its asks us “not to honor the sham arrangement between Rasmussen and the Berkmans.”
As we now explain, we disagree with the City on both points.
First, concerning the trial court’s decision to split allowable costs equally between Rasmussen and the plaintiffs, we find no basis for overturning it. The court found an equal division “reasonable, because all plaintiffs were aligned parties.” That decision presumably was informed by the court’s earlier role in presiding over the trial. “The trial court heard the evidence and was in the best position to determine apportionment of the value of the work” as between the prevailing and nonprevailing parties and to “allocate the costs accordingly.” (Slavin v. Fink, supra, 25 Cal.App.4th at p. 726; see also, e.g., Santantonio v. Westinghouse Broadcasting Co., supra, 25 Cal.App.4th at p. 125 [“the trial judge was in the best position to allocate a fair share of the recoverable costs”].) Additionally, the decision here also was supported by the declaration of Rasmussen’s attorney, which “was adequate to establish the cost-sharing agreement” between Rasmussen and the Berkmans to divide costs equally. (Jones v. Dumrichob, supra, 63 Cal.App.4th at p. 1265.)
Addressing the second prong of the City’s challenge, we reject its assertion that the cost-sharing arrangement between Rasmussen and the Berkmans is improper. The City argues that “the Berkmans should not be entitled to recover their costs by entering a secret deal with Rasmussen.” In advancing that argument, the City relies on Gibson v. Thrifty Drug Co. (1959) 173 Cal.App.2d 554. That casedoes not assist the City. There, the court held that the plaintiff was not entitled to recover from the losing defendant jury fees that had been paid by the prevailing defendant. (Id. at p. 556.) But as the court explained, “had [the plaintiff] paid the entire jury fees she would have been entitled to those as against” the losing defendant. (Ibid.) Our case is factually distinguishable. In Gibson, the prevailing plaintiff had not paid the claimed fees. (Ibid.) Here, by contrast, Rasmussen in fact incurred the challenged costs. The City’s assertion that Rasmussen “was not obligated to pay costs” is unavailing. The trial court found otherwise, based on his attorney’s declaration. (See Jones v. Dumrichob, supra, 63 Cal.App.4th at p. 1265 [rejecting “the unsubstantiated statement that respondent did not incur” the challenged fees].)
In sum, the City failed to satisfy its burden of demonstrating that Rasmussen did not incur the challenged costs, or that the costs attributed and awarded to Rasmussen were either unnecessary or unreasonable in amount. There is no abuse of discretion on this record.
D. Conclusion
A trial court’s award of costs will be reversed only upon a showing of clear abuse of discretion and a miscarriage of justice. The City made no such showing here. First, because Rasmussen was the prevailing party under section 1032, he was entitled to allowable costs as a matter of right. Since the trial court had no discretion to deny those costs, there was no error in awarding them. Second, there is ample support for the trial court’s finding that Rasmussen’s settlement offer was reasonable. For that reason, the cost-shifting provisions of section 998 came into play, giving the court discretion to award expert witness fees that Rasmussen actually incurred. Finally, there has been no showing that the trial court abused its discretion in determining that Rasmussen was entitled to an award representing half of the challenged costs, which he incurred.
DISPOSITION
In Rasmussen’s appeal, we affirm the order of September 28, 2007, which denied him costs and fees under Code of Civil Procedure section 2033.420. In the City’s appeal, we affirm the order of October 4, 2007, partly denying its motion to tax Rasmussen’s costs. The parties shall bear their own costs on appeal.
WE CONCUR: Mihara, Acting P.J., Duffy, J.
“(a) If a party fails to admit the genuineness of any document or the truth of any matter when requested to do so under this chapter, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney’s fees.
“(b) The court shall make this order unless it finds any of the following:
“(1) An objection to the request was sustained or a response to it was waived under Section 2033.290.
“(2) The admission sought was of no substantial importance.
“(3) The party failing to make the admission had reasonable ground to believe that that party would prevail on the matter.
“(4) There was other good reason for the failure to admit.”
Significantly, both Miller and Lewin were decided under a prior version of section 1032, which did not define prevailing party. (See Chinn v. KMR Property Management, supra, 166 Cal.App.4th at pp. 186-188.) The current version of the statute, which governs here, statutorily defines prevailing party to include a cross-defendant in whose favor dismissal is entered. (Id. at p. 189; City of Long Beach, supra, 157 Cal.App.4th at p. 680.)